Cairo: A defiant Hosni Mubarak on Thursday announced that he would transfer some powers to his deputy Omar Suleiman, but stopped short of resigning as president of Egypt. He said he will not bow to foreign pressure.
In a televised address to the nation, Mubarak said he was immediately initiating steps to allow a peaceful transfer of power following elections in September.
"I have expressed with all clarity my intention not to stand in forthcoming elections," he said.
"I will not accept to be dictated orders from the outside no matter what the source is and no matter what the justifications are," he said, responding to calls from world leaders for him to step down.
Mubarak did not specify what powers he was handing over to Suleiman and made no mention of lifting the state of emergency in force for three decades.
Anti-government protesters in Cairo's central Tahrir Square reacted furiously to the president's decision to remain in power. Some brandished their shoes - a serious insult in the Muslim world - while others shouted 'Get out!' and 'Down, down Hosni Mubarak'.
A senior member of Egypt's banned main opposition group, the Muslim Brotherhood, said Mubarak was ignoring the will of the people and would remain firmly in control.
"The speech is frustrating and bypasses the will of the people," Helmy al-Gazzar told DPA.
German Foreign Minister Guido Westerwelle said the president's speech 'was not the hoped-for step forward'.
"I fear the speech will not have the desired affect of bringing peace to Egypt ... The concern of the international community, and that of the German government, has increased rather than diminished."
British Foreign Secretary William Hague, speaking to the BBC from Bahrain, said it was not immediately clear what powers had been handed over to Suleiman and what the implications were.
Before the televised speech, speculation was rife that Mubarak, who has been president for 30 years, would relinquish power after 17 days of widespread street protests.
But at the start of his speech he made it immediately clear that he would not step down and was 'determined to execute what I have promised'.
He paid tribute to the young people calling for change, and for the first time commented on the deaths of protesters in Tahrir Square, expressing his sadness and promising that those responsible for the killings would be punished.
"Our priority now is to regain confidence between citizens among themselves and to regain confidence in the international arena and to regain confidence about the reforms that we have pledged," he said.
"Egypt is going through some difficult times, and it is not right to continue in this discourse because it has affected our economy and we have lost day after day, and it is in danger - it is putting Egypt through a situation where people who have called for reform will be the first ones to be affected by it."
Suleiman, speaking on television after Mubarak, said he had been entrusted by the president to 'safeguard the stability of Egypt' and 'restore peace and security'.
"I am committed to carrying out whatever is necessary to ensure the peaceful transfer of power in accordance with the constitution," he said.
There had been speculation that the army may take over, after the Supreme Council of Egyptian Armed Forces announced it had convened a "continuous session" to discuss measures to "safeguard" the country.
The protesters, however, said they would not accept military leadership, with people in Tahrir Square chanting, "Civilian rule, not military rule."
Earlier in the day, a senior army official had told the cheering protesters, "All your demands will be met tonight."
Hossan Badrawi, the secretary general of the ruling National Democratic Party, said that he would like Mubarak to 'step aside' and would be 'surprised' if he were still in power on Friday.
The 82-year-old president had previously rejected calls to quit, instead promising not to seek re-election after his term ends in September. His government had also shown willingness to implement political reforms in the last few days.
But thousands of demonstrators stood their ground in Tahrir Square, the focal point of the protests, while public and private sector workers in various parts of the country continued to go on strike.
The protesters were also called upon to join a second '1-million-strong rally' on Friday.
Foreign Minister Ahmed Abul-Gheit had warned in interviews with Arab and US media that armed forces could be forced into action 'if chaos erupts'.
"Such a step could lead to a very dangerous situation," he said in an interview broadcast by Al Arabiya television on Thursday.
Tanks have been stationed outside Mubarak's residence in the Cairo suburb of Heliopolis during the protests.
Precise casualty figures have not been confirmed, but the UN said last week that it had received unconfirmed reports of 300 dead in the demonstrations.