Egypt's embattled President Hosni Mubarak announced Thursday he was handing his powers over to his vice president, Omar Suleiman, and ordered constitutional amendments.

But the move means he retains his title of president and ensures regime control over the reform process, falling short of protester demands.

U.S. President Barack Obama declared Thursday the world was watching history unfold and a moment of transformation in Egypt, as reports said President Hosni Mubarak may be ready to step down.

Obama also directly addressed the young people of Egypt who have swelled massive crowds in Cairo, saying America would do all it could to ensure a genuine transition to democracy at an apparently pivotal moment of the crisis.

Egypt's military said Thursday it would respond to the "legitimate" demands of the people as President Hosni Mubarak's regime tottered in the face of massive nationwide protests demanding his overthrow.

It was not immediately clear if the announcement spelled the end of Mubarak's 30-year-reign, the central demand of hundreds of thousands of people who have filled the country's streets in the two-week-old uprising.

Egyptian President Hosni Mubarak could "respond to the people's demands by tomorrow," the secretary general of his ruling party told the BBC on Thursday, as protesters demanded the strongman's departure.

"I expect the president to respond to the demands of the people, because what matters to him in the end is the stability of the country. The post is not important to him," Hossam Badrawi of the National Democratic Party said.

Wael Ghonim, a Google executive who emerged as a prominent voice of Egyptian protests against President Hosni Mubarak, promised on Thursday to stay out of politics once the dissidents' demands are met.

The 30-year-old was freed Monday after 12 days in custody, and was swiftly propelled to the forefront of the popular uprising, addressing huge crowds in Tahrir Square, the epicenter of the protests against Mubarak.

U.S. President Barack Obama's administration was the target of harsh criticism in Congress Wednesday for not doing enough to support "pro-democracy forces" in Lebanon and Egypt.

"In both Egypt and Lebanon, we have failed to effectively leverage U.S. assistance in support of peaceful, pro-democracy forces and to help build strong, accountable, independent, democratic institutions as a bulwark against the instability that is now spreading throughout much of the region," said Representative Ileana Ros-Lehtinen at a hearing of the Foreign Affairs Committee she heads.

Egypt's embattled regime warned of a military crackdown on Wednesday as massive protests demanding its overthrow spilled out across the country and deadly unrest flared in the remote south.

Hundreds of demonstrators marched on parliament from the epicenter of the uprising in Cairo's Tahrir Square the day after the largest protests since the revolt began, as other demonstrations erupted in cities across the country.

Egypt's embattled President Hosni Mubarak met a senior Russian envoy Wednesday amid mounting protests against his three decade-long rule over the Arab world's most populous country.

Mubarak met Alexander Sultanov, deputy Russian foreign minister and special Middle East envoy, at the presidential palace in Cairo, as thousands protested in the city's Tahrir Square and outside parliament.

Immigration officers have been instructed to bar Palestinians from entering Egypt, an official at Cairo airport said on Wednesday after 12 travelers were sent back.

"There are instructions to stop Palestinians entering Egypt. Twelve Palestinians were sent back to the places they came from on Wednesday," the official told Agence France Presse, on condition of anonymity.

The trappings of a determined protest movement — chanting, flags and raised fists — fill Tahrir Square, the hard-won enclave of those who seek a new Egypt. But some there fear an enemy within.

The boldest challenge ever to President Hosni Mubarak's three decades of authoritarian rule has so far failed in its singular goal to oust him immediately. And after initial euphoria over their defiance of a state once thought impregnable, protesters are increasingly uneasy that Mubarak or leaders he has chosen may manage to hang on to power.