US Secretary of State Hillary Clinton said governments in the Middle East must realize the status quo is unsustainable and make the transition to democracy "a strategic necessity."
"This is not simply a matter of idealism," Ms Clinton said today in a speech in Munich. "Without genuine progress toward open and accountable political systems, the gap between people and their governments will grow, and instability will only deepen."
She made her comments at the Munich Security Conference after about 100,000 protesters rallied in Cairo for an 11th day to demand that President Hosni Mubarak end his 30 years in power. The Egyptian president has refused to step down, even as the Obama administration has been talking to Egyptian officials and the opposition over a transition of power.
Vice president Omar Suleiman net a group of prominent figures today to examine a proposed solution under which he would assume the president's powers for an interim period, one of the group's members said.
But with some of the protesters insisting they wanted not just Mr Mubarak but also his allies out, it was unclear that would be enough to end the crisis.
Mr Mubarak said on Thursday Egypt faced chaos if he resigned now, though he has promised to step down in September.
Hundreds of thousands of Egyptians held mostly peaceful demonstrations across the country yesterday to demand an immediate end to Mubarak's 30-year rule.
And in Cairo's Tahrir Square, the hub of demonstrations, protesters occupying the usually busy intersection in the heart of the city said they were not giving up.
"Mubarak must go, Mubarak must go," someone shouted over a loudspeaker after brief burst of heavy gunfire echoed across the square shortly before 2am today.
Apart from the gunfire - which one protester attributed to the army firing in the air to keep away Mubarak loyalists who clashed with anti-government protesters earlier in the week - the night passed quietly.
With the unrest crippling the economy in Arab world's most populous nation, some Egyptians are anxious to return to normal. Banks were due to reopen tomorrow, the start of the week in Egypt, and the stock market on Monday.
Ex-intelligence chief Suleiman was due to discuss with the group of prominent figures an article in the constitution covering Mubarak handing over power to his vice president, one of the group's members, Diaa Rashwan, said.
Mr Mubarak would stay on in a symbolic position under the proposal being promoted by the group of Egyptians calling itself the "The Council of Wise Men", allowing him to serve out his tenure with some dignity.
Many protesters however say they want a complete break with the past, while Mr Obama has also called for "meaningful" change.
And while some analysts say transferring powers to Mr Suleiman could help defuse the crisis, others argue it needs a bigger step shift to pave the way for free and fair elections.
Yesterday, people in cities across Egypt demonstrated in what organisers billed a "Day of Departure".
Tahrir Square was crammed with people chanting "We're not leaving, You are leaving!", waving Egyptian flags and singing the national anthem, with a beefed-up military presence keeping pro-Mubarak activists out to prevent any bloodshed.
The mood was festive as secular and religious Egyptians, Muslims and Christians, professionals and poorer members of society, mingled with members of the mass Islamist movement the Muslim Brotherhood.
Turnout nationwide seemed short of the more than one million seen on Tuesday. Mr Mubarak went on television that night to tell Egyptians he would leave office in September.
Despite mass street protests and concessions by government, Mr Mubarak's fate now lies as much in deals struck among generals keen to retain influence and Western officials anxious not to see Egypt slide into chaos or be taken over by Islamists.
Egypt has been a US ally throughout Mr Mubarak's rule and it is strategically vital to American interests because of its 1979 peace treaty with Israel and its control of the Suez Canal.
Mr Mubarak had also presented himself as a bulwark against militant Islam.
The United Nations estimates 300 people have died in the unrest, inspired in part by protests in Tunisia which forced veteran strongman Zine al-Abidine Ben Ali to flee last month.
Reuters