Video | Protestors reject Mubarak’s speech

In a televised speech, Mubarak refused to step down from office and said he would finish his term despite demands by millions of protestors for him to step down immediately.

The veteran president's announcement drew angry jeers from demonstrators who again defied a curfew to spend the night in the capital's Tahrir Square – epicentre of protests that raged into a ninth straight day.

Despite years of ambiguity over whether he would seek a sixth term and his refusal until this week to even name a vice-president, the 82-year-old Mubarak insisted he had never intended to stay in office beyond this year.

Mubarak said the country had a choice "between chaos and stability" after the clashes between protesters and security personnel that have left an estimated 300 people dead and more than 3,000 injured.

Mubarak pledged to introduce amendments to the constitution to limit the president's term of office and to make it easier for people to field candidates for the office.

Opposition leaders have long demanded such reforms but the ambitions of the protest movement go much further.

Their anger contrasted with the festive mood that had prevailed in the square during yesterday as tens of thousands gathered, buoyed by a promise from the army that it regarded the protesters grievances as "legitimate" and would not open fire.

They were among hundreds of thousands who took to the streets across the capital with a similar number in the second city Alexandria and smaller protests around the country.

US President Barack Obama, who spoke to Mubarak after the speech, went on television to say he had told the Egyptian president that an orderly transition needed to begin immediately.

Obama also made a gesture towards those who reacted angrily to Mubarak's speech.

"To the people of Egypt, particularly the young people of Egypt, I want to be clear, we hear your voices. I have an unyielding belief that you will determine your own destiny," Obama said at the White House.

The US leader also commended Egypt's all-powerful military for its professionalism and urged it to "continue its efforts to help ensure that this time of change is peaceful."

Mubarak's comments bouyed stock markets in Asia, which dealers said were bullish due to the perception that the president had done enough to begin to ease tensions in his country.

Egyptian opposition groups have said however there could be no negotiations with the regime until Mubarak left.

Former UN nuclear watchdog chief Mohamed ElBaradei, whom some consider as a potential figurehead for the protest movement, had even said Friday had been set as "departure day" for the veteran president.

But Mubarak's announcement did go a long way to meeting quietly voiced US calls for him to make his future plans plain. A US official described it as significant but raised doubts about whether it would be enough.

The angry eight-day revolt in Egypt has sent jitters throughout the Middle East, coming as it did after the uprising in Tunisia and with analysts warning of a domino effect through the Arab world.

In Jordan, King Abdullah II sacked his government after weeks of demands for change, Yemen's president summoned parliament ahead of a "day of rage" called for Thursday, and a Facebook group of Syrian youth called for a peaceful revolution to start on Friday.

With no sign of an end to Egypt's biggest uprising in three decades, foreign governments have been scrambling since the weekend to pull their nationals from the country, leading to chaotic scenes at Cairo's airport.