The move, announced by state television, came as protests against Mubarak's regime continued for a seventh day and the United States called for an "orderly transition" to a new government.
As the size of the crowd at Cairo's Tahrir Square swelled early this afternoon, television said newly appointed Prime Minister Ahmed Shafiq has carried out Mubarak's orders to name members of a new government to replace the cabinet he sacked on January 27.
Many ministers from the previous government will retain their positions. But a new interior minister was named as General Mahmud Wagdi, who previously was responsible for Egypt's prison system and headed the criminal investigations department for police in Cairo.
Earlier on January 31, Egyptian police, absent from city streets for the past 48 hours, were redeployed across the country.
RFE/RL Radio Free Iraq's correspondent in Cairo, Ahmed Ragab, described the scene: "The police have returned to the streets and main squares but in plain clothes and heavily armed. They stop passersby and enquire about people's identities. There is news that more prisoners have escaped."
With helicopters flying overhead, army tanks also were positioned in central Cairo to keep vehicle traffic away from Tahrir Square -- which has become a focal point of demonstrations that have left an estimated 125 people dead.
'We Don't Want Any More Military'
A limited number of police were bolstering army troops at the entrances to Tahrir Square. But correspondents say those police were keeping a relatively low profile shortly after midday prayers and were not confronting thousands of people who were converging on the square -- even after an early curfew went into effect.
Meanwhile, protest leaders have raised the pressure on Mubarak's regime by calling for an indefinite nationwide strike and a "million-man march" in Cairo on February 1.
In a statement reported by state television, Egypt's army vowed not to use force against peaceful demonstrators. The army statement describes the demands of the protesters as "legitimate" and vows not to crush the protests.
"To the great people of Egypt, your armed forces, acknowledging the legitimate rights of the people...have not used and will not use force against the Egyptian people," the statement said, which was reported by state television.
The army's decision to all but come out in support of the demonstrators has been described by some analysts as a blow to Mubarak, who today swore in a reshuffled cabinet amid the most serious challenge to his more than 30-year rule.
In replacing Interior Minister Habib el-Adly -- widely blamed by protesters for brutality shown by security forces -- Mubarak is meeting one of their key demands.
But in Tahrir Square, news of Wagdi's appointment was greeted by protesters at Tahrir Square with chants of "Civilian government! Civilian government! We don't want any more military!"
Fawaz Gerges, the director of the Middle East Center at the London School of Economics, says Mubarak is trying to present a new cabinet with much more acceptable public faces to the Egyptian public.
"What Mubarak [also] is trying to do is to send multiple messages to audiences inside Egypt and outside Egypt. But the reality is, he said 'I ordered the prime minister to undertake political reforms.' This statement speaks volumes about where power lies and how much everything is invested in President Mubarak himself," Gerges says.
Gerges says that protesters consider the new cabinet as being too close to the military behind Mubarak's regime.
"The army has the key to resolve the crisis in Egypt. We have to wait and see how far the army will go in backing Hosni Mubarak or negotiating a transitional government in the next few days and weeks ahead," Gerges says.
Meanwhile, Mohamed ElBaradei emerged as an important opposition figure late on January 30 after other opponents of Mubarak's regime formed a committee to negotiate with the army -- the power seen as critical for tipping the balance of the political momentum.
Egypt's largest opposition group, the banned Muslim Brotherhood, has rejected Mubarak's new prime minister and vice president. But it has backed ElBaradei -- a Nobel laureate and former head of the International Atomic Energy Agency -- as a member of the opposition's proposed negotiating committee.
ElBaradei, who returned to Cairo last week, joined the angry crowd at Tahrir Square on the night on January 30 and told demonstrators they were "on the right path" toward "a new Egypt" in which every citizen lives in freedom and dignity:
"I came today to join you on the happiest day in our lives. Today I can look each one of you in the eye. Today as Egyptians, you have taken back your rights to life and freedom. What has begun cannot go back. As we said earlier, we have one main demand: the end of the regime and the beginning of a new stage," ElBaradei said.
Gerges sees ElBaradei's rising profile as another important key to a possible resolution to Egypt's crisis.
"ElBaradei has emerged as the major public face of the opposition. ElBaradei is a unifying figure for the opposition -- including the Muslim Brotherhood, including the nationalists and the liberal-leaning opposition," Gerges says.
"My take on it is that ElBaradei represents an acceptable option for the military. The question is, will the military negotiate with ElBaradei? Will ElBaradei accept to be part of a transitional government led by Omar Suleiman?"
Indeed, the intentions of the army's top generals who met with Mubarak on January 30 remain unclear.
But many protesters have initially been welcoming the presence of soldiers on the streets in the place of riot police. Army troops -- at least at the rank-and-file level -- also could be seen putting banners on their armored vehicles declaring themselves as "protectors of the Egyptian nation and the Egyptian people." Many soldiers also have made no effort to remove anti-Mubarak graffiti painted on their vehicles during the weekend by demonstrators.
In Washington, there is heightened concern about the future of the three-decade-old Camp David Peace Accords between Egypt and Israel should Mubarak's regime collapse.
U.S. Calls For 'Orderly Transition'
U.S. Secretary of State Hillary Clinton called for an orderly transition of power, but warned in a series of TV interviews that that transition was not likely to happen overnight without grave consequences for everyone involved.
"Now is the time to move toward a national dialogue, to take concrete steps, to create the political space for peaceful protest and for the creation of peaceful oppositions that want to help work toward a better future. That is what we want to see," Clinton said.
Clinton said the United States had consistently insisted that there be free and fair elections in Egypt and that Washington still expected that to be one of the outcomes of the current unrest.
But Clinton also suggested that Mubarak's intelligence chief, Omar Suleiman -- appointed during the weekend as Mubarak's first ever vice president -- is well-positioned to help push through reforms without jeopardizing peace with Israel or geopolitical stability across the Middle East.
"We have urged for 30 years that there be a vice president and finally a vice president was announced just a day or two ago. So we have tried to, in our partnership with Egypt, to make the point over and over again about what will create a better pathway for the Egyptian people in terms of greater participation with political reforms," Clinton said.
Meanwhile, analysts warn that the risk of financial turmoil is increasing the longer the protests continue. Egypt's central bank says it has enough reserve currency to ward off financial crisis.
But banks and the stock exchange remained closed for a second day today, and ordinary Egyptians are expressing concern about having money for food in the days ahead.
With many shops also closed as a result of weekend looting, there were long queues for basic essentials like bread and food supplies in Cairo super markets today and reports of panic buying.
written by Ron Synovitz, with agency reports