Egypt's former president Hosni Mubarak has been banned from leaving the country, as the interim government stepped up legal proceedings against the recently ousted dictator and his family.

The Egyptian attorney general, Abdel Meguid Mahmoud, also announced that all of Mubarak's domestic assets would be frozen pending further enquiries.

The measures extend to Mubarak's wife and children – including his youngest son, Gamal, a former banker and close associate of many of Egypt's leading businessmen – and may be the prelude to a formal prosecution.

A number of former ministers from the deposed regime have already been made subject to travel bans and asset freezes since Mubarak was forced out of office on 11 February, and many are now facing possible trial on charges ranging from corruption to the unlawful killing of protesters.

Until now Mubarak had seemed to be shielded from investigation by the ruling military council, a source of much anger among pro-change demonstrators who accuse army generals of cutting a deal with the former leader.

"The decision to freeze Mubarak's and his family's assets in and outside Egypt is very important," said Tarek Osman, an Egyptian writer. "Apart from appeasing the masses and emphasising that the public prosecutor has a free hand, it sends a clear message to the remnants of the Mubarak administration that their attempts to exert influence in the next phase will not be tolerated – especially during the coming parliamentary elections."

The armed forces have been criticised in recent days for dragging their heels on reform and pursuing a model of political transition which maintains several former regime figures in positions of authority. There has also been widespread concern that the delay in pursuing Mubarak and his family enabled them to move much of their fortune to safe havens abroad.

Given that most of the legal efforts against Mubarak-era ministers seem so far to have been motivated by political considerations, the decision to launch legal proceedings against Mubarak now suggests Egypt's generals are fearful that public opinion will not tolerate any leniency for the former western ally who ruled Egypt for 30 years.

It is not yet clear whether any prosecution of Mubarak would have a lasting impact on Egypt's politics, as the country prepares for a national referendum on constitutional reform. "This latest move will not bear much weight on the country's political landscape in the medium term," argued Osman.

"The stalwarts of the Mubarak administration are not amongst the forces that will shape this coming period," he added. "The key variables are whether liberals will be able to put forward structured narratives and viable parties that can retain the momentum they created during the revolt, and also the struggles within political Islam, including the Muslim Brotherhood."