Nearly two years after it became the insurrectionary hub which forced the downfall of a dictator, Tahrir Square was again transformed into an arena of political agitation yesterday – but this time it was against the Muslim Brotherhood and its elected president, Mohamed Morsi.

With fears mounting that the deeply divided country is on the verge of another political meltdown, tens of thousands of protesters marched on downtown Cairo to challenge the recent decree issued by Mr Morsi which grants him near limitless powers.

Last night ambulances lined side-streets around Tahrir Square in anticipation of an outbreak of violence.

Following a week in which three people have died and more than 400 have been injured during nationwide rioting, one paramedic told The Independent that hospital staff across the capital had been drafted in to work overtime.

Sporadic clashes broke out yesterday morning between protesters and security forces near the American embassy. Fighting continued through the day, and a 54-year-old man later died after inhaling tear gas.

By the afternoon, thousands of protesters had begun to file into Tahrir Square, many of them chanting for the downfall of the nizaam, or regime – the slogan of Egypt's uprising which was screamed to devastating effect against Mr Morsi's predecessor. Thousands more demonstrated around the country, including in Alexandria, Suez and Minya in Middle Egypt.

Although ostensibly a protest against Mr Morsi's presidential decree, yesterday's rally also bore the signs of being an emphatic rebuke to the very idea of Islamist rule. "I don't want to change the constitution," said 56-year-old Zain el-Abdeen. "I want Mohamed Morsi to fall."

Festooned above the circular lawn plaza in the centre of the square, an enormous banner read "Egypt for all of the Egyptians" – a reference to the fears of many anti-Islamists that a Muslim Brotherhood administration would govern only for the interests of its own members.

In an example of what many Egyptians fear the most – an ugly political split along religious lines which may even pave the way for a counter-revolution by the army or elements from the old regime – there were also signs calling for the downfall of the Brotherhood's Supreme Guide, Mohammed Badie.

"Mohamed Morsi has no vision," said Taiseer Fahmy, an Egyptian actress, as she sat inside her tent in the middle of Tahrir Square. "There is no plan from his government."

The 59-year-old, who heads the Equality and Development Party, said she was worried about the idea of theocratic rule. "Hosni Mubarak was corrupt, but Mohamed Morsi belongs to the Muslim Brotherhood and not to Egypt."

The decree issued by Morsi last Thursday has whipped up a firestorm in Egyptian politics. His opponents accused the new president – who this time last week was basking in near-universal praise for his role in the Gaza ceasefire – of turning himself into "Mubarak with a beard".

The nation's judges meanwhile, stung after being stripped of their constitutional oversight role, also staged a revolt. Last-ditch efforts to win them round appeared to have failed after a meeting between Mr Morsi and the judiciary produced no major concessions.