The order to the interior minister issued yesterday raised the prospect of a dangerous showdown just days after 82 people were killed at a pro-Morsi protest in Cairo. It came as diplomatic efforts to find a peaceful way out of Egypt's crisis gathered pace, with the EU and Germany sending envoys to urge a peaceful resolution to the standoff.
Adding to the tensions, judicial sources said prosecutors had referred to trial the Muslim Brotherhood's fugitive supreme guide, Mohammed Badie, for allegedly inciting the killing of protesters.
The cabinet's announcement came in a statement that said pro-Morsi protest camps at two Cairo squares posed a "threat to national security".
It added: "The continuation of the dangerous situation in Rabaa al-Adawiya and Nahda squares, and consequent terrorism and road blockages, are no longer acceptable given the threat to national security."
The Islamists, camped out for weeks calling for the reinstatement of Morsi, Egypt's first democratically elected president, reacted defiantly.
The coalition of Islamists behind the protests called for a mass rally on Friday.
"Nothing will change," Gehad El-Haddad, a Brotherhood spokesman for the coalition, told AFP, dismissing the cabinet order as an "attempt to terrorise Egyptians".
Washington also expressed concern, urging Egypt to "respect the right of peaceful assemblies."
"That obviously includes sit-ins," State Department spokeswoman Marie Harf told reporters.
British Foreign Secretary William Hague called for "an urgent end to the current bloodshed" and the release of Morsi, in a phone call to Egypt's interim vice president Mohamed ElBaradei, Britain's Foreign Office said.
Amnesty International denounced the cabinet order as a "recipe for further bloodshed".
Hassiba Hadj Sahraoui, deputy director for Amnesty's Middle East section, said: "Given the Egyptian security forces' record of policing demonstrations with the routine use of excessive and unwarranted lethal force, this latest announcement gives a seal of approval to further abuse.
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