A speaker made the announcement in Cairo's Tahrir Square where hundreds of thousands broke down in tears, celebrated and hugged each other chanting: "The people have brought down the regime." Others shouted: "Allahu Akbar (God is great).
The 82-year-old Mubarak's downfall after 18 days of unprecedented mass protests was a momentous victory for people power and was sure to rock autocrats throughout the Arab world and beyond.
Egypt's powerful military gave guarantees earlier on Friday that promised democratic reforms would be carried out but angry protesters intensified an uprising against Mubarak, marching on the presidential palace and the state television tower.
It was an effort by the army to defuse the revolt but, in disregarding protesters' key demand for Mubarak's ouster now, it failed to calm the turmoil that has disrupted the economy and rattled the entire Middle East.
The military's intervention was not enough.
The tumult over Mubarak's refusal to resign had tested the loyalties of the armed forces, which had to choose whether to protect their supreme commander or ditch him.
The sharpening confrontation had raised fear of uncontrolled violence in the most populous Arab nation, a key U.S. ally in an oil-rich region where the chance of chaos spreading to other long stable but repressive states troubles the West.
Washington has called for a prompt democratic transition to restore stability in Egypt, a rare Arab state no longer hostile to Israel, guardian of the Suez Canal linking Europe and Asia and a major force against militant Islam in the region.
The army statement noted that Mubarak had handed powers to govern the country of 80 million people to his deputy the previous day -- perhaps signalling that this should satisfy demonstrators, reformists and opposition figures.
"This is not our demand," one protester said, after relaying the contents of the army statement to the crowd in Cairo's central Tahrir Square. "We have one demand, that Mubarak step down." He has said he will stay until September elections.
The Muslim Brotherhood, an Islamist opposition group, urged protesters to keep up mass nationwide street protests, describing Mubarak's concessions as a trick to stay in power.
REFORMS TOO LITTLE TOO LATE
Hundreds of thousands of protesters rallied across Egypt, including in the industrial city of Suez, earlier the scene of some of the fiercest violence in the crisis, and the second city of Alexandria, as well as in Tanta and other Nile Delta centres.
The army also said it "confirms the lifting of the state of emergency as soon as the current circumstances end", a pledge that would remove a law imposed after Mubarak became president following Anwar Sadat's assassination in 1981 and that protesters say has long been used to stifle dissent.
It further promised to guarantee free and fair elections and other concessions made by Mubarak to protesters that would have been unthinkable before Jan. 25, when the revolt began.
But none of this was enough for 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.
Since the fall of Tunisia's long-time leader Zine al-Abidine Ben Ali, which triggered protests around the region, Egyptians have been demonstrating in huge numbers against rising prices, poverty, unemployment and their authoritarian regime.
EMERGENCY LAWS
World powers had increasingly pressured Mubarak to organise an orderly transition of power since the protests erupted on Jan. 28 setting off an earthquake that has shaken Egypt sending shock waves around the Middle East.
Mubarak, 82, was thrust into office when Islamists gunned down his predecessor Anwar Sadat at a military parade in 1981.
The burly former air force commander has proved a far more durable leader than anyone imagined at the time, governing under emergency laws protesters say were used to crush dissent.
The president has long promoted peace abroad and more recently backed economic reforms at home led by his cabinet under Prime Minister Ahmed Nazif. But he always kept a tight lid on political opposition.
Mubarak resisted any significant political change even under pressure from the United States, which has poured billions of dollars of military and other aid into Egypt since it became the first Arab state to make peace with Israel, signing a treaty in 1979.
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