The standoff posed a major test for the military as protesters stepped up calls for the army to intervene against Mubarak, a former air force commander and one of its own. The military's Supreme Council held an "important" meeting Friday morning, which was chaired by Defense Minister Field Marshal Hussein Tantawi, the state news agency reported.
"The council will issue important statement to the people after the meeting," MENA said.
Mubarak gave most of his powers to his vice president but refused to resign or leave the country late Thursday, hours after the military made moves that had all the markings of a coup.
"We are waiting for a strong reaction from the army to Mubarak's speech," said Mohammed Mustapha, a protest spokesman. He said "huge numbers" of protesters were expected Friday.
Protesters already were massing outside the Cabinet, parliament and the state television headquarters several blocks away from Tahrir Square, the center of the mass rallies that began on Jan. 25. Hundreds of demonstrators formed a human barricade around the building that houses state TV and radio and were turning employees away from the building.
Soldiers and tanks were guarding the street that leads to the TV building, which overlooks the Nile, but were not stopping the protesters from pouring in.
Organizers planned rallies at six separate protest locations, in addition to Tahrir Square, which means Liberation Square.
"We are going to camp everywhere to put more pressure on the regime," said Abdel-Rahman Samir, an organizer.
Several hundred thousand people had packed into Tahrir Square on Thursday, ecstatic with expectation that Mubarak would announce his resignation. Instead, they watched in shocked silence as he spoke, holding their foreheads in anger and disbelief. Some broke into tears. Others waved their shoes in the air in contempt. After the speech, they broke into chants of "Leave, leave, leave."
Around 2,000 protesters then marched on the state television headquarters several blocks away from Tahrir, guarded by the military with barbed wire and tanks. "They are the liars," the crowd shouted, pointing at the building, chanting, "We won't leave, they will leave."
Prominent reform advocate Mohamed ElBaradei, whose supporters were among the organizers of the 18-day-old wave of protests, warned in a Twitter message that "Egypt will explode."
"The army must save the country now," the Nobel Peace laureate said. "I call on the Egyptian army to immediately interfere to rescue Egypt. The credibility of the army is on the line."
Another leading figure of the protest movement, Google executive Wael Ghonim, called for caution.
"The situation is complicated. I don't want the blood of the martyrs to be wasted and at the same time I don't want to see more bloodshed," he said in comments posted on Facebook. "We have really achieved significant political accomplishments in a short time but the youth's demand of the ouster (of Mubarak) has not been accomplished."
Protesters' hopes that Mubarak would resign had been raised Thursday when a council of the military's top generals announced it had stepped in to secure the country, and a senior commander told protesters in Tahrir Square that all their demands would soon be met.
The military's Supreme Council said earlier on state TV that it was in permanent session, a status that it takes only in times of war. It said it was exploring "what measures and arrangements could be made to safeguard the nation, its achievements and the ambitions of its great people." That suggested Tantawi and his generals were in charge of the country.
The statement was labeled "Communique No. 1," language that also suggests a military coup.
State TV showed Tantawi chairing the council with around two dozen top stern-faced army officers seated around a table. Mubarak and Vice President Omar Suleiman, a former army general and intelligence chief named to his post after the protests erupted Jan. 25, were not present, the strongest indication during the day of a rift.
After Mubarak's announcement, the mood among protesters was a mix of fury, disappointment, determination to go on and a grim realism that they should have expected little else from him.
One activist, Waleed el-Korumi, said protesters planned peaceful marches, but he warned of chaos if the army does not intervene.
"This will push the country to the edge of the abyss," he said. "We will lay waste to our country if we march on the palace. It's a case of both sides sticking to their guns and at the end we will lose our nation."
The Muslim Brotherhood, Egypt's largest and best organized opposition group, called the speech a "farce."
"This is an illegitimate president handing power to an illegitimate vice president," said Mohammed Abbas, who represents the Brotherhood's youth wing. "We reject this speech and we call on Mubarak to step down and hand his powers to the army."
"There is struggle of power between Mubarak and the army. The Egyptians trust the army," he added.
In his address on state TV, Mubarak showed the strategy he has followed throughout the days of upheaval, trying to defuse the greatest challenge ever to his nearly three-decade authoritarian rule. So far, he has made a series of largely superficial concessions while resolutely sticking to his refusal to step down immediately or allow steps that would undermine the grip of his regime.
Looking frail but speaking in a determined voice, Mubarak spoke as if he were still in charge, saying he was "adamant to continue to shoulder my responsibility to protect the constitution and safeguard the interests of the people." He vowed that he would remain in the country and said he was addressing the youth in Tahrir as "the president of the republic."
Even after delegating authority to his vice president, Mubarak retains his powers to request constitutional amendments and dissolve parliament or the Cabinet. The constitution allows the president to transfer his other authorities if he is unable to carry out his duties "due to any temporary obstacle."
"I saw fit to delegate the authorities of the president to the vice president, as dictated in the constitution," he said.
President Barack Obama appeared dismayed by Mubarak's announcement. He said in a statement that it was not clear that an "immediate, meaningful" transition to democracy was taking place and warned that too many Egyptians are not convinced that the government is serious about making genuine change.
Suleiman was already leading the regime's efforts to deal with the crisis, though he has failed to ease the protests, which have only escalated in size and ambition, drawing crowds of up to a quarter-million people. In the past 48 hours they have spiraled even further out of control, with labor protests erupting around the country and riots breaking out as impoverished Egyptians attacked and set fire to several police and governor headquarters in cities outside Cairo.
Mubarak insisted on the continuation of a government-dominated process for reform that Suleiman drew up and that protesters have roundly rejected because they fear it will mean only cosmetic change and not real democracy. Under that system, a panel of judges and lawyers put together by Suleiman recommends constitutional changes, while a separate panel monitors to ensure that state promises are carried out.
Suleiman has also offered dialogue with the protesters and opposition over the nature of reforms. He has not explained how the negotiations fit in if the judges panel, which is led by Mubarak supporters, is recommending amendments. In any case, the protesters and opposition have resolutely refused talks until Mubarak goes.
Mubarak called the protesters' demands legitimate and promised that September presidential elections - in which he says he will not run - will be "free and fair" with supervision to ensure transparency.
He said that on the recommendation of the panel, he had requested the amendment of five articles of the constitution to loosen the now restrictive conditions on who can run for president, to restore judicial supervision of elections, and to impose term limits on the presidency.
He also annulled a constitutional article that gives the president the right to order a military trial for civilians accused of terrorism. He said that step would "clear the way" for eventually scrapping a hated emergency law but with a major caveat - "once security and stability are restored."
The emergency law, imposed when Mubarak came to power in 1981, gives police virtually unlimited powers of arrest.