Egypt delayed early voting on a contentious draft constitution and might even call off the entire referendum, in the first signs that Islamic leader President Mohammed Morsi is finally yielding to days of protests and deadly street clashes.
Tens of thousands marched on the presidential palace after pushing past barbed wire fences installed by the army and calling for Mr Morsi to step down. Thousands also camped out in Tahrir Square, birthplace of the uprising that toppled Hosni Mubarak in 2011.
A spokesman for Mr Morsi's Muslim Brotherhood urged the group's supporters to practise "self-restraint" after hundreds gathered in front of a mosque near the presidential palace and appealed for them not to march to the palace and to avoid confrontation.
The announcement by election committee head Ismail Hamdi to delay early voting on the charter was a surprise and it was difficult to predict whether it would lead to a breakthrough in the political crisis.
The president's aides said the move would ease some pressure and provide room for negotiations with the opposition.
But Mr Morsi's opponents have rejected talks, saying he must first cancel the referendum and meet other demands. Last night an opposition umbrella group called for an open-ended sit-in in front of the presidential palace.
The crisis began on November 22, when Mr Morsi issued a decree that gave him absolute powers and immunity from judicial oversight.
It further deepened when he called for a December 15 national referendum on the draft constitution hurriedly produced by the Islamist-led constituent assembly, infused with articles that liberals fear would pave the way for Islamising Egypt.
Legal affairs minister Mohammed Mahsoub said the administration was considering several proposals - including calling off the referendum and returning it to the constituent assembly for changes. Another possibility was disbanding the constituent assembly and forming a new one, either by direct vote or an agreement among the political forces.
"We have a big chance tomorrow," Mr Mahsoub told the Qatari-based Al-Jazeera network, referring to what he said was a meeting between Mr Morsi and political forces today.
"There are no deadlines or referendums outside the country. Tomorrow or day after, we might reach a good agreement."
Vice president Mahmoud Mekki also told the broadcaster that he had contacted leading democracy advocate Mohamed ElBaradei to join Mr Morsi in a dialogue. Mr ElBaradei leads the newly-formed National Salvation Front, a group of liberals and youths who opposed Mr Morsi's decrees and led the protests in Cairo.
In a televised speech, Mr ElBaradei made clear the opposition's demands: cancellation of the declaration that Mr Morsi used to give himself immunity from judicial oversight and postponement of the referendum.
"The people are angry because they feel their rights have been raped," Mr ElBaradei said. "If he takes these decisions, he will be opening the door for dialogue. I hope he is listening."
But the opposition National Salvation Front rejected talks with Mr Morsi, urging a continuing sit-in at the palace and warned of assaults on the protesters and more violence.
"We reject the fake dialogue which Morsi has called for. No talks after bloodshed and before holding those responsible accountable," the front said in a statement.
Some protesters expressed optimism after hearing that the early voting for Egyptians abroad, due to begin today, had been put off until December 5.
"This looks like the beginning of a retraction," said Dr Mohsen Ibrahim, 56-year-old demonstrator. "This means Morsi may postpone the referendum. It looks like the pressure is working out."
But he warned that "if Morsi doesn't see the numbers of people protesting, then he will be repeating the same mistake of Mubarak."
Since the Arab Spring uprising that toppled Mubarak, Egypt has been split between Islamists and mostly secular and liberal protesters. Each side depicts the conflict as an all-out fight for Egypt's future and identity.
The opposition accuses Mr Morsi and his Islamist allies of turning increasingly dictatorial to force their agenda on the country, monopolise power and turn Egypt to a religious state. The Muslim Brotherhood and other Islamists say the opposition is trying to use the streets to overturn their victories in elections over the past year and stifle popular demands to implement Islamic Shariah law.
Later the spiritual leader of Egypt's fundamentalist Muslim Brotherhood urged Egyptians to disown violence, saying that working through the ballot box is the best way to lift the country out of its current political crisis.
Brotherhood supreme guide Mohammed Badie said the group's supporters did not initiate the violent clashes this week outside the presidential palace that left at least six people dead.
Badie's remarks came ahead of a meeting Morsi - who hails from the Brotherhood -has called with his opponents to discuss the crisis. The opposition has rejected talks, saying Morsi must first cancel the referendum on the draft constitution set for December 15.