CRISISBOOM

Omar Suleiman said Mr Mubarak, who earlier left Cairo for Sharm el-Sheikh, has handed control to the military.

Car horns were heard around the capital in celebration following the announcement.

Crowds in Cairo’s Tahrir Square chanted: “The people have brought down the regime.”

“In these grave circumstances that the country is passing through, President Hosni Mubarak has decided to leave his position as president of the republic,” Mr Suleiman said. “He has mandated the Armed Forces Supreme Council to run the state. God is our protector and succor.”

Mohammed ElBaradei, one of Egypt’s key opposition leaders, said: “This is the greatest day of my life.

“The country has been liberated after decades of repression,” he said, adding that he expects a “beautiful” transition of power.

US stocks surged on Friday on the news of the resignation of Egyptian President Hosni Mubarak, with the Dow moving from an early slight loss to add 0.30 percent, while the Nasdaq also rose 0.30 percent.

Mr Mubarak, who on Thursday night maintained his intention to stay in office until September, enraging hundreds of thousands of protesters, travelled with his family to the Red Sea resort of Sharm el-Sheikh, earlier on Friday.

Protesters moved overnight to the Ittihadiya presidential palace in the Cairo suburb of Heliopolis for the first time since protests started in Jan. 25.

The protesters gathered up against a barbed wire cordon around the palace, about 50 metres from the palace walls at its closest point.

Tanks and soldiers of the elite Republican Guard, responsible for the president’s security, surrounded the palace.

“The Republican Guard are protecting the presidential palaces,” an armed forces source said.

In the morning, Egypt’s powerful military gave guarantees that promised democratic reforms would be carried out but angry protesters intensified an uprising against Mr Mubarak by marching on the presidential palace and mobbing the state television hub.

The army’s gesture was an effort to defuse an 18-day-old revolt unprecedented in modern Egypt but, in ignoring the key demand of protesters for Mubarak’s ouster now, it failed to stop turmoil disrupting the economy and rattling the Middle East.

Mr Mubarak had promised only that he would not seek re-election in September and that he would preside over reforms until then.

This was not enough for the many hundreds of thousands of mistrustful protesters who rallied in cities across the Arab world’s most populous and influential country on Friday, fed up with high unemployment, a corrupt elite and police repression.

The escalating confrontation has raised fear of uncontrolled violence in the most populous Arab nation, a key US ally in an oil-rich region where the chance of chaos spreading to other long stable but repressive states troubles the West.