Egypt: Mubarak sacks cabinet and defends security role
Mr Mubarak also dismissed his government and said a new cabinet would be announced on Saturday.
Tens of thousands took part in protests in Cairo, Suez, Alexandria and other cities.
Protesters set fire to the headquarters of the governing NDP party and besieged state TV and the foreign ministry.
At least 13 people were killed in Suez on Friday, while in Cairo, five people died, according to medical sources.
That brings the death toll to at least 26 since the protests began on Tuesday.
Set ablaze "I have asked the government to present its resignation today," Mr Mubarak said, adding that he would appoint a new government on Saturday.
He also said he understood the protesters' grievances but that a thin line divided liberty from chaos and he would not allow Egypt to be destabilised.
The BBC's Jon Leyne in Cairo says there had clearly been a lot of discussion behind the scenes before Mr Mubarak spoke to the country.
But his comments will probably just provoke further unrest, says our correspondent - the people on the streets will be both infuriated by his accusations that they are seeking to destabilise the country and inspired that, having wrung some concessions from him, they could yet manage to oust him.
After Mr Mubarak spoke, a sustained volley was heard from central Cairo, which our correspondent said could have been either tear gas or live fire.
The Reuters news agency later quoted witnesses as saying more than 20 military vehicles rolled in to central Tahrir Square shortly after midnight, scattering protesters into the sidestreets.
The authorities had earlier announced a curfew from 1800 to 0700 local time (1600-0500 GMT), but it was immediately and widely flouted.
The headquarters of the governing NDP party was set ablaze, while protesters also besieged the state broadcaster and the foreign ministry.
Internet and phone services - both mobile and landline - have been severely disrupted, although protesters are using proxies to work around the restrictions.
Correspondents in Cairo say military helicopters have been circling overhead.
The US, which counts Egypt as a key ally, has appealed for calm from both sides, saying it has urged President Mubarak to enact reforms.
However, White House spokesman Robert Gibbs said Washington would review its aid to Egypt based on events in the coming days.
Britain, the US and France are advising against non-essential travel to Egypt.
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