The statement came several hours after Mubarak refused to step down or leave Egypt and instead handed most of his powers to his vice president Omar Suleiman, enraging protesters who pleaded for the military to take action to push him out.
Anti-government protesters, who met no resistance from soldiers guarding the buildings, said they were more determined than ever as the uprising entered its 18th day.
"We expected the army's decision, we always knew that it was behind Mubarak. But we know it's not going to harm us," Safi Massoud said as she joined thousands of people packed into Cairo's central Tahrir Square. "We wont leave until we choose a transition president. We don't want Mubarak, we don't want Suleiman."
The statement by the military - the second in as many days - followed a meeting earlier Friday of the Armed Forces Supreme Council, led by the defense minister, Field Marshal Hussein Tantawi.
The military endorsed Mubarak's plan for a peaceful transfer of power and free and fair presidential elections later this year. It also supported Mubarak's promise to lift the hated emergency laws, in force since Egypt's authoritarian ruler came to office in 1981, when the current security situation permits.
The military called for public services and urged "the return of normal life in order to safeguard the achievements of our glorious people."