The Islamist-backed president spoke in a televised address on June 26 to mark his first year in power.
"Egypt is facing many challenges," Morsi said. "Political polarization and conflict has reached a stage that threatens our nascent democratic experience and threatens to put the whole nation in a state of paralysis and chaos, and none of us want this for our country."
The speech was given as opponents said they planned to stage mass rallies against Morsi’s rule on June 30, the anniversary of his inauguration.
Army troops are reported to have been deployed closer to cities ahead of the demonstrations, and at least two people were reported killed in clashes on June 26 in the city of Mansoura.
The pro-reform opposition argues that Morsi has used his year in office to concentrate power in the hands of the Muslim Brotherhood, which pursues an Islamist agenda, and accuses him of failing to implement the democratic ideals of the 2011 uprising that toppled longtime ruler Hosni Mubarak.
Morsi, a former senior figure of the Muslim Brotherhood, was elected in a democratic poll one year ago to become Egypt’s first Islamist-backed president.
In his speech, Morsi acknowledged making some mistakes as president, but didn’t specify the errors. He also invited political forces for talks on reform, aimed at getting state institutions to work in harmony.
The president also hit out at unnamed "enemies" of Egypt’s revolution, including foreigners who fear a "free, strong, and developed Egypt," as well as Egyptians who want to return the country to what he called a "corrupt, oppressive" state.
Morsi also emphasized that the president is the supreme commander of the armed forces, and said the military needs to focus on the defense of the country, not political questions.
Reacting to the speech, activists vowed to push forward with their demonstrations, saying Morsi had not addressed demands for an early presidential election.
The Tamarrod, or Rebellion, activist group says it has collected 15 million signatures in support of demands for early polls.
U.S. Secretary of State John Kerry, on a visit to Kuwait, called Egypt "historically a critical country" in the region and urged demonstrators to hold "peaceful and responsible" protests.
Eygpt receives billions of dollars in U.S. aid, including equipment and training for its armed forces.
Morsi’s first year in office has seen regular turmoil between reformists and pro-Islamist forces, as well as a declining economy that has led to a sharp drop in tourism and foreign business investment.