Hosni Mubarak handed over some of his powers as Egypt's president last night, succumbing to calls spreading across the country for him to relinquish at least part of his 30-year hold on the nation.
But the statement on television, at the end of a day when the army had appeared to stage a military coup, inflamed the thousands of protesters gathered in central Cairo.
The expectation was that Mr Mubarak would leave office. But in a long statement, the president only ceded some, unspecified, control to his vice-president and repeated that he would remain in his post until elections could be organised in September.
Huge chants of discontent rose up from the crowd. Protesters waved shoes in dismay and pledged to march on the presidential palace.
US President Barack Obama declared before the speech that the world was watching a historic moment in the crucial Middle Eastern state.
The strongman, who has ruled the country with an iron fist since 1981, was pushed to the edge earlier in the day by the formation of Egypt's Supreme Council of the Armed Forces, which appeared on television to issue what it called "communique number one".
The army appeared to be enacting a military coup and announced that the people's wishes would be met. The main demand of the crowds, however, has been the departure of Mr Mubarak.
Mr Obama said: "What is absolutely clear is that we are witnessing history unfold. It is a moment of transformation that is taking place because the people of Egypt are calling for change."
In Tahrir Square in central Cairo, the fulcrum of the protests, the crowd grew rapidly as events unfolded. As darkness fell, a mood of expectation swept over the capital.
Demonstrators chanted football songs normally sung when the national team is winning. A giant banner reading "Mubarak must fall", that has hung over the entrance to the square over the past week, was modified to read "Mubarak has fallen".
Protesters said they would reject any attempt at an army takeover.
"We do not accept a military coup, we just want the army to guarantee free and fair elections," said Amr Mohammed Ahmed (42) the owner of a sheet metal company.
"It is a tense situation. We hope the army can be controlled and that it will provide for presidential elections and oversee the dissolution of parliament," he said.
However, the violence and bloody battles of last week seemed long ago.
All afternoon yesterday, a human flood passed through the square, preparing for today's expected massive protests.
The people were confident, happy and optimistic.
"Mubarak is a robber and a killer. He has stolen our future," a student called Hassan said.
"Now we have a chance for a new Egypt."
The belief that the Mubarak family has stolen enough money to pay their country's national debt -- $70bn (€50bn) -- is a constant refrain. (© Daily Telegraph, London)