WRAPUP 5-Mubarak awaits release from Egyptian prison
(Adds state TV report, prosecutor's order, lawyer, Feltman, analyst)
* Mubarak release could exacerbate political crisis
* Army-backed government and Muslim Brotherhood in standoff
* Mubarak will still face house arrest
* Helicopter arrives at jail to move Mubarak - state TV
CAIRO, Aug 22 (Reuters) - Deposed leader Hosni Mubarak awaited his release from jail on Thursday as Egypt emerged from a week of bloody turmoil when its army-backed rulers cracked down on ousted President Mohamed Mursi's Muslim Brotherhood.
State television reported that a helicopter had arrived at Cairo's Tora prison to move Mubarak.
His immediate destination will be the armed forces' International Medical Center, a hospital northeast of Cairo, where he will remain under guard, according to remarks by his lawyer confirmed by medical and security sources.
The state prosecutor gave written orders to the authorities at Tora prison, on the capital's southern outskirts, to release Mubarak, 85, an official in the prosecutor's office said.
The prime minister's office has said Mubarak, who ruled Egypt for 30 years until he was overthrown in 2011 as uprisings swept the Arab world, will be placed under house arrest.
That decision was made under a month-long state of emergency declared last week when police stormed protest camps set up in Cairo by the Brotherhood to demand Mursi's reinstatement.
About 900 people, including some 100 soldiers and police, have been killed in violence across Egypt since then, making it the bloodiest bout of internal strife in the republic's history.
In the latest violence, gunmen in a car killed an army major and a soldier on a patrol near the Suez Canal city of Ismailia, security sources said on Thursday. Two soldiers were wounded. The assailants escaped.
Mubarak's imminent release dismayed some Egyptians. "Mubarak is a man who destroyed this country. And now he's going to walk free?" said a man who said he was trying to find out if his brother, arrested on Saturday, was in Tora prison.
He was among about 75 people lining up at the prison gate in scorching heat to visit family members inside.
"WE LOVE MUBARAK"
Across from the gate, a score of visiting relatives sat in the shade along a high concrete prison wall, waiting their turn.
"We love Mubarak," said Mohamed Hussein, 36, who has no job. His sister Fatheya chimed in: "Isn't it enough that for 30 years he did not drag us into a war, and let us live in dignity?"
A brief commotion occurred when the daughter of a jailed Brotherhood leader, Khairat al-Shater, berated journalists. "Why are you waiting for Mubarak? Why are you waiting in the heat and the sun?" the daughter, named Khadija, asked. "You know he will not come out here. We Islamists are in jail in there."
As several Egyptian journalists shouted at her to answer for the deaths of police officers in the unrest, she said she had been denied access to her imprisoned father. Asked if he had seen a lawyer, she told Reuters: "His lawyer is in jail."
Mubarak was sentenced to life in prison last year for failing to prevent the killing of demonstrators. But a court accepted his appeal earlier this year and ordered a retrial in the case, for which he has already served the maximum amount of pretrial detention. Mubarak was arrested in April, 2011.
This week, two court rulings in separate corruption cases removed the last legal grounds for his continued detention.
Mubarak is still being retried on charges of complicity in the killing of protesters during the revolt against him, but he has already served the maximum pretrial detention in that case.
The ailing former air force commander will not be allowed to leave Egypt and his assets remain frozen.
Mubarak's release would play to the Brotherhood's argument that the military is trying to rehabilitate the old order. The army-installed government casts its conflict with the Islamist movement as a life-or-death struggle against terrorism.
"This is the end. Mubarak will never be an important political player, but symbolically, it's a victory dance by the reconstituted old state under the leadership of the Supreme Council of the Armed Forces," said Joshua Stacher, a political scientist and an Egypt expert at Kent State University in the United States.
He was referring to the military council that took over from Mubarak and ruled until Mursi became president last year.
Political upheaval has gripped Egypt since Mursi's removal by the army on July 3, just over a year after he was elected.
The military's declared plan for a return to democracy has yet to calm the most populous Arab nation, where security forces impose a nightly curfew as they hunt down Brotherhood leaders.
The clampdown appears to have weakened the Arab world's oldest and arguably most influential Islamist group, which won five successive votes in Egypt after Mubarak's fall.
"FRIDAY OF MARTYRS"
The Brotherhood's ability to stage pro-Mursi demonstrations has faded in the past few days. One of its spokesmen, Ahmed Aref, was arrested on Thursday, the state news agency reported.
But Brotherhood supporters have called on Egyptians to hold "Friday of Martyrs" marches against the army takeover.
A pro-Mursi alliance called the National Coalition to Support Legitimacy said in a statement: "We will remain steadfast on the road to defeating the military coup."
Alarmed by the bloodshed, the United States and European Union are reviewing their aid to Cairo, but Saudi Arabia, a foe of the Brotherhood, has promised to cover any shortfall. Gulf Arab states have already pledged $12 billion since Mursi's fall.
EU foreign ministers stopped short of agreeing immediate cuts in aid to Egypt on Wednesday, in part because of concern that doing so could damage any future EU mediation effort.
An EU attempt to broker a compromise collapsed before security forces cleared out the Brotherhood protest camps.
James Moran, the bloc's ambassador in the Egyptian capital, described reconciliation prospects as a huge challenge.
"Passions are high, emotions are high. Things have to cool off a little bit," he said, skirting a question on whether the Brotherhood is committed to terrorism, as state media contend.
"It would be good if this is not all painted one colour. There may be different strains of opinion within the Islamist movement," he said. "One thing is for sure - the Islamist constituency is there, and you are going to have to find a way somehow of living with it."
A senior United Nations official, Jeffrey Feltman, met interim Prime Minister Hazem el-Beblawi on Thursday as part of an effort to promote peace and reconciliation.
The government has bristled at foreign attempts to use aid or persuasion to nudge it to seek a political compromise.
(Additional reporting by Cairo bureau; Writing by Alistair Lyon)