The top leadership body of Egypt's ruling party resigned today, including the president's son, but the regime appeared to be digging in its heels.

It appeared to be calculating that it can ride out street demonstrations and keep President Hosni Mubarak in office.

The ruling party leaders who resigned included the country's most powerful political figures - and its most unpopular among many Egyptians.

The move may have been aimed at convincing protesters in the streets that the regime is sincere in implementing democratic reforms they demand.

But state TV, announcing the resignations, still identified head of state Mubarak as president of the ruling party in a sign he would remain in authority.

And Prime Minister Ahmed Shafiq said stability was returning to the country, appearing confident that a deal on future reforms can be reached with the multiple opposition movements to defuse protests without the 82-year-old Mubarak necessarily leaving power immediately.

Protesters have refused to end their mass rallies in downtown Tahrir Square until Mubarak quits.

Tens of thousands gathered today in Tahrir, waving flags and chanting a day after some 100,000 massed there in an intensified demonstration labelled "the day of departure," in hopes it would be the day Mubarak leaves.

Their unprecedented 12-day movement has entered a delicate new phase. Organisers fear that without the pressure of protesters on the street, Mubarak's regime will enact only cosmetic reforms and try to preserve its grip on power.

So they are reluctant to lift their demonstrations without the concrete gain of Mubarak's removal and a transition mechanism that guarantees a real move to democracy afterward.

Mubarak has insisted he will remain in his post until the end of his term in the autumn.

In the meantime, the government has sought to draw opposition parties and the youth groups involved in the protests into immediate negotiations on constitutional reforms so presidential elections can be held in September to replace Mubarak.

Protest organisers, wary of a trap, have refused until Mubarak goes. A key question will be whether they can maintain enthusiasm and continue to rally large numbers. Some in Tahrir greeted the new concession of ruling party resignations with with scorn.

Wael Khalil, a 45-year-old activist, said it would "reinforce their (protesters') resolve and increase their confidence because it shows that they are winning, and the regime is retreating inch by inch."

Among those on the six-member party Steering Committee that stepped down was the National Democratic Party's secretary-general, Safwat el-Sharif, and the president's son Gamal Mubarak, who has long been seen as his father's intended heir as president.

The turmoil has crushed those ambitions, however, with Vice President Omar Suleiman promising in the past week that Gamal will not run for president in September.

A new Steering Committee was named, headed by Hossam Badrawy, who also replaced Gamal as head of a separate policies committee. The new body largely consists of young figures, one of the new appointees, Mohammed Kamal, told the Associated Press. "It's a good change. It reflects the mood of change that is sweeping the country," he said.

The move suggested that the military figures now dominating the regime - including Vice President Omar Suleiman and Prime Minister Shafiq - judged that dumping party veterans was the price for getting enough of the opposition to accept Mubarak's continuing in power.

At a press conference aired on state TV, Shafiq suggested the government hopes to convince enough factions to enter talks that the others will be forced to join in. Asked whether the Muslim Brotherhood, for example, will enter talks, Shafiq said: "Once they find the others are negotiation, for sure they will or they will be left alone ... The level of aspirations is going down day by day."

He noted that the protesters had changed their slogan from "day of departure" to a "week of steadfastness," saying that this was "because they failed on Friday" in forcing out Mubarak. "All this leads to stability," he said.

Government officials, meanwhile, sought to depict that normality was returning to a capital that has been paralysed for nearly two weeks by the crisis.

State TV announced that banks and courts, closed for most of the turmoil, will reopen on Sunday, the start of Egypt's work week, though daily bank withdrawals will be limited to 15,000 dollars (£9,500) and the stock market will remain shut at least through Monday.

The government and military have promised not to try to clear protesters from Tahrir, and soldiers guarding the square continued to let people enter to join the growing rally.

But there were signs of tension today. At one point, army tanks tried to bring out tanks to try to bulldoze away several burned out vehicles that protesters used in barricades during fighting this week with pro-regime attackers. The protesters say they want the gutted chassis in place in case of a new attack.

Protesters clambered onto the vehicles and lay down in front of them to prevent soldiers from removing them, and only after heated arguments did the troops agree.

Also, there were reports for the first time of attempts by troops guarding the square's entrances to prevent those entering from bringing food for protesters, thousands of whom have camped out for days and need a constant flow of supplies.

Protesters vowed to hold out in the square. Elwan Abdul Rahman, a 26-year-old who arrived in Tahrir on Friday from southern Egypt dismissed the prime minister's comments.

"He's laughing at the world, he's laughing at all of us," he said, pointing at the crowds and saying, "Do you think they're gonna go away tomorrow? ... People are here with their blood and their soul."

Shafiq's comments pointed to what could be the regime's strategy in the coming phase: isolate protests but let them go on in hopes they burn out from exhaustion while trying to keep the government Mubarak installed last week in place to direct the reform process.

Shafiq and Vice President Omar Suleiman - both military men like Mubarak and regime stalwarts put in their posts last week - have taken the lead in trying to arrange reform negotiations.

Egypt's top ally the United States has pressed Mubarak, who has ruled for nearly three decades with an authoritarian hand, to launch a democratic transition immediately and step aside quickly.

The administration has held behind-the-scenes talks with Egyptian officials on a variety of ways to do that, including a proposal that Mubarak step down now and hand power to Suleiman.

President Barack Obama stopped short of calling for Mubarak's immediate resignation, but said on Friday that the Egyptian leader should think about his legacy and exit office in a way that ensures peace and democracy. "My hope is - is that he will end up making the right decision."

Friday saw the tentative contacts between the government, protest organisers and independent actors trying to convince the leadership on a graceful way out for Mubarak.

A self-declared group of Egypt's elite - called the "group of wise men" - has circulated ideas to try to break that deadlock.

Among them is a proposal that Mubarak "deputise" his Vice President Suleiman with his powers and step down in everything but name, perhaps keeping the presidency title for the time being at least.

The "wise men," who are separate from the protesters on the ground, have met twice in recent days with Suleiman and Shafiq, said Amr el-Shobaki, a member of the group. Their proposals also call for the dissolving of the parliament monopolised by the ruling party and the end of emergency laws that give security forces near-unlimited powers.

"The stumbling point remains that of the president stepping down," el-Shobaki said.

MUBARAK MUST STAY - US ENVOY

A US envoy who met President Hosni Mubarak earlier this week says his continued leadership is "crucial" for now as Egypt heads into a transition to democracy.

Frank Wisner was dispatched to Cairo on Monday. He said today that "we're by no means out of the woods but at least a path is opening" toward a peaceful transition.

He said by video link from New York to a security conference in Munich: "I believe that President Mubarak's continued leadership is crucial - it's his chance to write his own legacy."

Wisner, a former ambassador to Egypt, says Mubarak now faces the "huge responsibility" of leading the country into a transition without resorting to force.