Egypt's ruling military moved up the date for transferring power to a civilian government to July of next year and consulted Tuesday with political parties on forming a new Cabinet.
"Our revolution was a model in the world," Field Marshal Hussein Tantawi told the nation. "We are willing to hand over authority and power to civilian power and we will go back to our barracks."
But the major concessions were immediately rejected by the tens of thousands of protesters in Cairo's iconic Tahrir Square threatening a "second revolution."
"We are not leaving, he leaves," chanted the protesters, demanding that Tantawi and his council of generals immediately give up power to a civilian transitional authority.
"The people want to bring down the field marshal," they shouted in scenes starkly reminiscent of the uprising that ousted Hosni Mubarak nine months ago.
Aboul-Ela Madi and Mohammed Selim el-Awa, two politicians who attended a five-hour crisis meeting with the military rulers, said the generals accepted the resignation of Prime Minister Essam Sharaf's government and will form a "national salvation" Cabinet to replace it.
Previously, the military rulers had floated late next year or early 2013 as the timetable for transferring power.
The military's concession came less than a week before the first parliamentary election since the ouster nine months ago of longtime authoritarian ruler Mubarak. The elections are staggered over three months.
"Our demands are clear. We want the military council to step down and hand over authority to a national salvation government with full authority," said Khaled El-Sayed, a member of the Youth Revolution Coalition and a candidate in the upcoming parliamentary election.
The commander of the Military Police and the Interior Minister, who is in charge of the police, must be tried for the "horrific crimes" of the past few days, he added.
"This is the maximum we can reach. The (Tahrir) square is something and the politics is something else," Madi told The Associated Press in a telephone interview.
He and Al-Awa were among 12 political party representatives and presidential hopefuls who attended the meeting with the military council. Not all parties were represented.
Madi and el-Awa also said the military agreed to release all protesters detained since Saturday and to put on trial police and army officers responsible for protesters' deaths. Nearly 30 protesters have been killed since Saturday.
They said the military agreed to hold presidential elections before the end of June 2012, a vote the ruling council has deemed the final stage necessary for transferring power.
— CNBC Middle East producer Laura Hadley Gamble contributed to this report.