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The BBC's Bethany Bell says Mr Mursi has tried to defuse the crisis by promising his new powers would be limited in scope
Egyptian protesters have vowed to continue defying President Mohammed Mursi's wide-ranging new powers.
Tens of thousands of people demonstrated across the country on Tuesday, in one of the largest protests since the overthrow of Hosni Mubarak.
Mr Mursi has said the decree will be limited in scope, but has refused continuing demands to overturn it.
Hundreds remain in Cairo's Tahrir Square - centre of protests since last year - with smoke bombs being thrown.
Mr Mursi's opponents have called for a mass rally on Friday.
The Muslim Brotherhood, to which Mr Mursi belongs, postponed a rally on Tuesday saying it wanted to avoid "public tension".
But it said it was capable of mobilising "millions" in support of the president.
Mr Mursi's backers say the decree was needed to protect the gains of the revolution against a judiciary with deep ties to the Mubarak era.
Protesters who have taken to the streets since the decree was issued last Thursday say the Brotherhood has hijacked the revolution.
Egypt's prime minister is to chair a cabinet meeting on Wednesday to discuss the situation, the Mena news agency said.
'Playing with fire'Anti-decree protesters continue clashed with police overnight in Tahrir Square.
"The people want to bring down the regime," some shouted, repeating a chant that was used in the same square last year during the protests that led to former President Mubarak's fall.
"Start Quote
End Quote Islam Bayoumi Cairo protesterNext Friday will be decisive"
"We don't want a dictatorship again," said 32-year-old Ahmed Husseini. "The Mubarak regime was a dictatorship. We had a revolution to have justice and freedom."
Protests were also held in Alexandria, Suez, Minya and other Nile Delta cities on Tuesday.
In the city of el-Mahalla el-Kubra, medical officials said more than 100 people were wounded as rival protesters threw stones and petrol bombs.
Several regional offices belonging to the Muslim Brotherhood were attacked.
"Next Friday will be decisive," Cairo protester Islam Bayoumi told the Associated Press news agency.
"If people maintain the same pressure and come in large numbers, they could manage to press the president and rescue the constitution."
But Saad Emara, a senior Muslim Brotherhood member, told AP: "The story now is that the civilian forces are playing with fire. This is a dangerous scene."
He said the president would not make any more concessions.
Sunday flashpoint?The president's decree - known as the constitutional declaration - said no authority could revoke his decisions.
"Start Quote
End Quote Ayman Qenawi CairoMursi has split the country down the middle"
There is a bar on judges dissolving the assembly that is drawing up a new constitution. The president is also authorised to take any measures to preserve the revolution, national unity or safeguard national security.
Critics say the decree is an attack on the judiciary.
On Monday, Mr Mursi told senior judges that the scope of the measure would be restricted to "sovereign matters", designed to protect institutions.
But judges who attended the meeting have said they are not satisfied.
Another possible flashpoint could be Sunday, when Egypt's constitutional court could rule to disband the constituent assembly in defiance of President Mursi's decree.
The assembly is dominated by the Brotherhood and its Islamist allies.
The courts have already dissolved the lower house of parliament, which was led by the Brotherhood.
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