CAIRO, Egypt (UPDATE 2) - A furious wave of protest swept Egypt's President Hosni Mubarak from power on Friday after 30 years of one-man rule, sparking jubilation on the streets and sending a warning to autocrats across the Arab world and beyond.
Mubarak, the second Arab leader to be overthrown by a popular uprising in a month, handed power to the army after 18 days of relentless rallies against poverty, corruption and repression caused support from the armed forces to evaporate.
Vice President Omar Suleiman said a military council would run the affairs of the most populous Arab nation. A free and fair presidential election has been promised for September, though some question the army's appetite for real democracy.
Mubarak, 82, had flown with his family from Cairo to the Red Sea resort of Sharm el-Sheikh, a ruling party official said.
Ecstatic Egyptians celebrated a peaceful "White Revolution" in carnival mood on the streets and people embraced in Tahrir, or Liberation, Square, the main focus for protest, claiming a victory over their "Pharoah" they hardly dared to believe.
"Nightmare over!" said tailor Saad el Din Ahmed, 65, in Cairo. "Now we have our freedom and can breathe and demand our rights. In Mubarak's era, we never saw a good day. Hopefully now we will see better times," said Mostafa Kamal, 33, a salesman.
There was a note of caution in the background, however, over how far the military under Field Marshal Mohamed Hussein Tantawi, Mubarak's veteran defence minister, are ready to permit a democracy -- especially since the hitherto banned Islamist Muslim Brotherhood is one of the best organised forces.
"This is just the end of the beginning," said Jon Alterman of the Center for Strategic and International Studies.
"Egypt isn't moving toward democracy, it's moved into martial law and where it goes is now subject to debate."
U.S. officials familiar with the U.S.-sponsored Egyptian military say Tantawi, 75, has long seemed resistant to change. He has been defence minister for more than 20 years with a past rooted firmly in the old guard's ruling elite.
Caution over military rule
In a statement, the higher military council said it would take measures for an interim phase and hoped to realise people's hopes. Striking the even-handed note the military has maintained throughout the crisis, it praised Mubarak for resigning "in the interests of the nation" and the "martyrs" who died protesting.
Risk consultancy Stratfor said: "The military has carried out a coup led by ... Tantawi. It is not clear whether Suleiman will remain as civilian head of the army-led government. Egypt is returning to the 1952 model of ruling the state via a council of army officers."
The crisis that brought down Mubarak was the worst since British-backed King Farouk was toppled in a military coup in 1952. Generals have ruled ever since, though Mubarak, and his predecessor Anwar Sadat in the 1970s, rarely appeared in uniform and kept active-service officers in the background.
A senior member of the Muslim Brotherhood said Egyptians had achieved the main goal of their popular uprising.
"I salute the Egyptian people and the martyrs. This is the day of victory for the Egyptian people. The main goal of the revolution has been achieved," Mohamed el-Katatni, former leader of the Brotherhood's parliamentary bloc, told Reuters.
But also expressing caution about the military's role in Egypt's future, Katatni said the Brotherhood awaited the next steps to be taken by the Higher Military Council which has taken charge of the country's affairs after Mubarak's decision.
"This is the greatest day of my life," said liberal activist and Nobel Peace laureate Mohamed ElBaradei, welcoming a period of sharing of power between the army and the people. He told Reuters that running for president was not on his mind.
"This nation has been born again, these people have been born again, and this is a new Egypt," said Ayman Nour, the only man to dare to challenge Mubarak in Egypt's only multi-candidate presidential election. He came a distant second to the incumbent in 2005, then found himself thrown in jail.
Protesters waved flags, set off fireworks and beat drums to celebrate this new chapter in modern Egyptian history. SMS text messages of congratulation zapped over mobile phone networks among ordinary Egyptians, hailing a victory for people power.
A speaker made the announcement in Tahrir Square where hundreds of thousands danced and sang, chanting: "The people have brought down the regime." Others shouted: "Allahu Akbar" (God is greatest). Women ululated in jubilation.
Some declared an end to injustice. Others said they finally saw hope in a country they feel has lost its place as the political, cultural and economic heart of the Arab world. Most were just proud to be Egyptian on a day when history was made.
With an eye on the military's role, U.S. Vice President Joe Biden said Egypt must have democracy. Biden said the transition must be "irreversible" saying the change in power in Egypt was a "pivotal" moment for that country and the Middle East.
President Barack Obama was due to speak later after being briefed by his national security advisers.
"It's broken a psychological barrier not just for North Africa but across the Middle East. I think you could see some contagion in terms of protests; Morocco, perhaps Jordan, Yemen," said Anthony Skinner of political risk consultancy Maplecroft.
Algerian authorities were bracing for protests on Saturday. Non-Arab Iran's Islamist leaders hailed the overthrow of a ruler who was allied to Washington and Israel. But pro-democracy groups in Tehran also hope to draw inspiration from Cairo.
British Prime Minister David Cameron called it a precious moment of opportunity. German Chancellor Angela Merkel said she shared the people's happiness. France urged steps towards a free and transparent election.
Israel, with whom Egypt signed the first Arab peace treaty in 1979, said it hoped relations would remain peaceful.
The confrontation had raised fear of uncontrolled violence in Egypt, a linchpin U.S. ally in an oil-rich region where the chance of chaotic unrest spreading to other long stable but repressive states troubles the West.
Financial markets welcomed the news, seeing less chance of a conflict in the oil-rich region. Swiss authorities said they had frozen assets that may belong to Mubarak.
Washington has called for a prompt democratic transition to restore stability in Egypt, a rare Arab state no longer hostile to Israel, guardian of the Suez Canal linking Europe and Asia and a major force against militant Islam in the region.
Tantawi, heads the military council, according a military source. Al Arabiya said an army statement would announce the sacking of the cabinet, the suspension of the upper and lower houses of parliament and that the head of the constitutional court would lead with the military council.
Army rescue failed
Egypt's powerful military gave guarantees earlier on Friday that promised democratic reforms would be carried out but angry protesters had intensified an uprising against Mubarak, marching on the presidential palace and the state television tower.
It was an effort by the army to defuse the revolt but, in disregarding protesters' key demand for Mubarak's immediate removal, it failed to calm the turmoil that has disrupted the economy and rattled the volatile Middle East.
The tumult over Mubarak's refusal to resign had tested the loyalties of the armed forces, which had to choose whether to protect their supreme commander or ditch him.
After the fall on Jan. 14 of Tunisia's long-time leader Zine al-Abidine Ben Ali, which inspired protests around the region, Egyptians had been demonstrating in huge numbers against rising prices, poverty, unemployment and their authoritarian regime.
World powers had increasingly pressured Mubarak to organise an orderly transition of power.
Mubarak was thrust into office when Islamists gunned down his predecessor Sadat at a military parade in 1981.
The burly former air force commander proved a far more durable leader than anyone imagined at the time. He promoted Middle East peace abroad and more recently backed economic reforms at home.
But he always kept a tight lid on political opposition.
Reporting by Samia Nakhoul, Edmund Blair, Marwa Awad, Yasmine Saleh, Dina Zayed, Shaimaa Fayed, Alexander Dziadosz, Sherine El Madany, Patrick Werr, Alistair Lyon, Tom Perry, Andrew Hammond, Jonathan Wright, Peter Millership and Alison Williams in Cairo; Arshad Mohammed and Ross Colvin in Washington; Writing by Peter Millership; Editing by Alastair Macdonald