The Egyptian military has rejected the demands of pro-democracy protesters for a swift transfer of power to a civilian administration, saying it intends to rule by martial law until elections are held.

The army's announcement, which included the suspending of the constitution, was a further rebuff to some pro-democracy activists after troops were sent to clear demonstrators from Cairo's Tahrir Square, the centre of the protests that brought down Hosni Mubarak. "We do not want any protesters to sit in the square after today," said the head of the military police, Mohamed Ibrahim Moustafa Ali. Many agreed to leave but a hardcore refused, saying they would remain until the army took a series of steps toward democratic reform including installing a civilian-led government and abolishing the repressive state of emergency.

The ruling military council said it intends to retain power for six months or longer while elections are scheduled and will rule by decree. It suspended the constitution and said a committee will draw up amendments that will be put to a referendum. It also dissolved the widely discredited parliament, elected in a tainted ballot last year.

In a sign that the army will only tolerate a limited challenge to its power, it is expected to issue a communique on Monday saying that it will crack down on those creating "chaos and disorder" as well as effectively banning strikes.

The moves were welcomed by some opposition figures including Ayman Nour, who was jailed after challenging Mubarak for the presidency in 2005. "It is a victory for the revolution," he told Reuters.

But others were disturbed by the army's failure to agree to a civilian-led interim government as well as to end the 30-year state of emergency and the release of political prisoners.

"We need heavy participation by the civilians," said Mohamed ElBaradei, the former nuclear inspector who has become an opposition spokesman. "It cannot be the army running the show."

Mahmoud Nassar, one of the organisers behind the Tahrir Square protests, said the demonstrations would go on. "The revolution is continuing. Its demands have not been met yet," he said. "The sit-in and protests are in constant activity until the demands are met. All are invited to join."

The military regime has also retained Mubarak's cabinet, to the frustration of some protesters.

"There is no change in the form, method or process of work. Matters are completely stable," said the prime minister, Ahmed Shafiq. "Our main concern now as a cabinet is security. We need to bring back a sense of security to the Egyptian citizen."

The Egyptian uprising, along with events in Tunisia, continues to have an impact across the region, prompting protests over the weekend in Algeria, Sudan and Yemen. Protests have also been called in Bahrain on Monday, where the king has tried to ease tensions by vowing to give £1,600 to each family.