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Egyptian President Hosni Mubarak says he will not seek re-election, but has rejected demands to step down immediately and leave the country.

Mubarak made the announcement Tuesday evening on state television after eight days of demonstrations culminated with 250,000 people in the streets today.

Shortly after the speech, clashes broke out between protesters and government supporters in Alexandria, according to Al-Jazeera television.

The 82-year-old Mubarak, a former air force commander, stated his intention to finish the remainder of his presidential term, which ends in September.

"My priority now is for a peaceful transfer of power to whoever the people choose in the election," he said. "In all sincerity, regardless of the current circumstances, I never intended to be a candidate for another term.

"I have exhausted my life in serving Egypt and my people. I will die on the soil of Egypt and be judged by history."

A special envoy dispatched from Washington by President Barack Obama told Mubarak that the U.S. sees his presidency at an end and urged him to prepare for a transition to democratic elections.

In a brief televised statement, Obama said he spoke to Mubarak Tuesday evening and said the Egyptian president "recognizes the status quo is not sustainable and that a change must take place."

Obama also said it was not the role of any other country to determine Egypt's new leaders but said an "orderly transition must be meaningful, must be peaceful and must begin now."

"We are witnessing the beginning of a new chapter in the history of a great country and a longtime partner of the United States," Obama said.

Prime Minister Stephen Harper also released a statement Tuesday evening saying, "Canada reiterates its support for the Egyptian people as they transition to new leadership and a promising future."

Protests continue

A quarter of a million people jammed into a public square in central Cairo Tuesday, the biggest protest yet, and many reacted angrily after the speech.

"Go, go, go! We are not leaving until he leaves," protesters chanted.

But CTV's National Affairs correspondent Lisa LaFlamme said the overall reaction from the crowd was mixed, as many wanted Mubarak to step down immediately.

"People are having mixed reactions. There are those obviously who wanted him to step down right now," she said from Cairo. "And there are those who are actually more measured, saying ‘We can wait. We waited 30 years for change. We've walked these streets for eight days, we can wait a few months longer.'"

LaFlamme said that the crowd did not dissipate after Mubarak's speech and in fact, appeared to be growing.

"The loudest voices are saying, ‘We are not leaving, we didn't get what we wanted,'" she said. "However, there were a lot of people that said, ‘We don't need him to leave immediately, we just want to know that we will have a free and fair election."

The sprawling crowd in Tahrir Square includes teachers, students, professionals and Egypt's urban poor, all of whom are united in their desire to see the end of the three-decades long Mubarak regime.

"This is the end for him. It's time," said Musab Galal, a 23-year-old university graduate who travelled to Cairo from the Nile Delta city of Menoufiya.

The protesters on the streets of Cairo said they wanted Mubarak to step down on account of the poverty, corruption and lack of freedoms that have plagued the Egyptian people during his 30-year rule.

A coalition of opposition groups had demanded the Egyptian leader resign by Friday, and the groups are said to be in negotiations to reach joint demands for his regime.

In Tahrir Square, protesters chanted for their desire "to bring down" Mubarak's regime.

Two dummies representing Mubarak were hung from traffic lights in the square. On their chests was a message: "We want to put the murderous president on trial."

The dummies were also covered with the Star of David, an apparent allusion to the accusation of many protesters that Mubarak is too closely tied to Israel.

Shadi Hamid, the director of research at the Brookings Doha Center in Qatar, said other Arab countries are watching what is happening in Egypt closely -- especially after a similar bout of protests ousted the leader of Tunisia last month.

"What we're seeing here is really a region-wide protest movement and as for who is next, all bets are off," Hamid told Â鶹ӰÊÓ Channel from Qatar on Tuesday.

"The important thing here is that Arabs have discovered that they have the power to take matters into their own hands and that if enough of them go onto the streets, they can topple their own regimes."

In nearby Jordan, King Abdullah II fired his own government Tuesday in the wake of protests across his country demanding the resignation of Prime Minister Samir Rifai.

Dialogue with Mubarak regime

Newly appointed Vice President Omar Suleiman went on television Tuesday to state an offer to have a dialogue with the "political forces" urging change in Egypt.

Abu'l-Ela Madi, a spokesperson for one of the participating opposition groups, al-Wasat, said there was also discussion Tuesday about whether Mohamed ElBaradei -- the former head of the UN nuclear watchdog and pro-democracy advocate -- should act as opposition spokesperson.

Ashraf Hegazy, the executive director of the Dubai Initiative at Harvard University, said that ElBaradei remains a bit of an "unknown quantity" in Egyptian politics, as he has spent much of his adult life outside of his birth country.

But Hegazy said that ElBaradei is likely the best person to help build bridges between opposition groups who need to unite in their push for change.

"There are so many factions with a lot of different ideologies and all of them have some level of support in the country," Hegazy told CTV's Canada AM during a Tuesday morning interview from Newton, Mass.

"So for them to build a coalition to lead the country, they really need someone who is somewhat of an outsider that they can agree on."

Army won't harm protesters

Eight days into a period of daily protests, the people pushing for change have won the support of the national army, which has said it will not fire on protesters.

Military spokesman Ismail Etman said Tuesday that "the freedom of expression is guaranteed" for everyone taking part in the protests.

Seemungal said the army is trying to ensure that the Tahrir Square protests remain safe and non-violent.

"They are forcing people through choke-points, so it takes a long time to get into the square, but what they are trying to do is make sure that people aren't coming in with weapons and that they can guarantee it's a peaceful demonstration," Seemungal told CTV's Canada AM from Cairo on Tuesday.

The protesters also appear to be committed to keeping violence out of their demonstrations.

Volunteers with shirts reading "Security of the People" said they were on the lookout for government infiltrators who could attempt to instigate violence.

"We will throw out anyone who tries to create trouble," one of the volunteers said over a loudspeaker.

Outside of Tahrir Square, schools, banks and the stock market remained closed for the third straight day.

There is no bus service between cities, leaving protesters with the challenges of finding private transportation into Cairo.

Abdel Rahman Fathi, 25, said his friends were using private cars to make their way to the mass of protesters in Tahrir Square.

"The goal is to oust the regime," he said. "Every day we try to increase the number."

With files from The Associated Press