Violence and bloodshed could break out in a massive protest march on Egyptian President Hosni Mubarak's palace tomorrow, a New Zealander in Cairo reports.

Journalist Glen Johnson said elation quickly turned to outrage when it became clear Mubarak would not resign earlier this morning.

Massive crowds in Cairo's Tahrir Square shouted in fury and chanted for an end to his 30-year reign, he said.

A member of Egypt's Muslim Brotherhood told him thousands would renew those calls in a protest march on the presidential palace after midday tomorrow.

He is worried that could escalate tensions to breaking point after 17 days of protests in Cairo.

"The potential is there for violence. There could be bloodshed."

That depends largely on whether the military decide to support the protest movement, he said.

Lead dissident Mohamed ElBaradei has called for the army to take control of Egypt, lest it "explode".

Most protestors believe the army is on their side and could react angrily if it turns out that is not the case, said Johnson.

"Personally, I think the military has sided with the Government. Once people start to wake up to that fact, it could become really explosive."

He was also worried about the possibility the presidential guard, security forces or gangs of "thugs" that incited violence earlier in the week could clash with the crowds of protestors.

The situation on the streets of Cairo remains extremely volatile despite Vice-President Omar Suleiman urging protestors to head home or back to work, Johnson said.

ElBaradei, a leading democracy advocate, is concerned that carnage may sweep across the nation and is calling on the army to intervene after President Hosni Mubarak refused to step down.

"Egypt will explode. Army must save the country now," he wrote on Twitter shortly after Mubarak handed power over to his deputy but said the transition to end his three-decade rule would last until September.

ElBaradei is an Egyptian law scholar and diplomat. He was formerly the Director General of the International Atomic Energy Agency.

Meanwhile, Egypt's Vice President Omar Suleiman told street protesters and strikers to head home or back to work, in his first speech after President Mubarak delegated him presidential powers.

Suleiman told "the youth of Egypt, its heroes, go home and go back to your jobs" in a televised statement shortly after Mubarak made an address formally putting his deputy in charge of government business.

Mubarak did not immediately resign as president.

He said a political transition ending his 30-year-reign would last until September.

The demands of protesters calling for his immediate ouster are just and legitimate, he said in the televised speech.

Protesters in central Cairo's Tahrir Square reacted with fury when Mubarak failed to announce his immediate resignation, demanding the army join them in revolt.

The country's military, meanwhile, has said it will "support the legitimate demands of the people".

All this comes on the 17th day of protests against Mr Mubarak's 30-year rule.

Thousands of demonstrators gathered in Cairo's Tahrir Square, waving flags and chanting slogans as they awaited the one piece of news they wanted to hear - President Mubarak's resignation.

His announcement a week ago that he did not intend to stand in the country's next elections in September drew anger and further protest from the demonstrators.

That didn't go far enough, their placards screamed.

More anger and hosility greeted today's announcement, which was shown on a large screen in the Square.

President Barack Obama said the world was "witnessing history unfold" in Egypt, and that the US would do everything it could to support an "orderly and genuine" transition to democracy.

In recent days, the US government had stepped up its call for the protesters' concerns to be addressed.

- with AFP, AP, AGENCIES