In a surprise and dramatic reversal, President Hosni Mubarak ordered the Constitution changed to allow challengers on the ballot this fall, paving the way for the first-ever multiparty presidential elections in the world's most populous Arab country.
An open election has long been a demand of the opposition but was repeatedly rejected by the ruling party, with Mubarak only last month dismissing calls for reform as "futile."
The sudden shift on Saturday was the first sign from the key US ally that it was ready to participate in the democratic evolution in the Middle East, particularly after historic elections in Iraq and the Palestinian territories. Mubarak's government has faced increasingly vocal opposition at home and growing friction with the US over the lack of reform.
"We have moved a mountain," said Rifaat el-Said, leader of the opposition Tagammu Party. "This should open the gate for other democratic reforms."
The US cautiously welcomed the proposal.
"We believe voters in all countries benefit from having greater choices and genuine competition among candidates," State Department spokesman Steven Pike said Saturday. "This appears to be a step in the direction of a more open political system and we welcome it."
But Mubarak's order to parliament declared the amendment must state that any potential candidate be a member of an official political party and win the endorsement of parliament, which is dominated by the president's ruling party.
Most opposition parties and reform activists said the initiative, though welcome, did not go far enough and they feared it was only cosmetic. All acknowledged that Mubarak was likely to stay in power after the September vote.
One party has held a lock on power for more than half a century and every president has been unopposed in elections since the 1952 revolution overthrew the monarchy.
Egypt holds presidential referendums every six years in which people vote "yes" or "no" for a single candidate approved by parliament. Mubarak, who came to power in 1981 after the assassination of Anwar Sadat, has stood in four ballots, winning more than 90 percent each time.
Mubarak made the announcement in a nationally televised speech, surprising even some in his inner circle, one source close to the presidency said.
Touting "freedom and democracy," Mubarak told an audience at Menoufia University, north of Cairo, that he asked parliament and the consultative Shura Council to amend the constitution's Article 76 on presidential elections.
The changes would set a direct vote "giving the chance for political parties to run" and "providing guarantees that allow more than one candidate for the people to choose among them," Mubarak said.
The audience broke into applause, with some shouting, "Long live Mubarak, mentor of freedom and democracy!" Others recited verses of poetry praising the government.
Ayman Nour, who is one of the strongest proponents of an open election and who was arrested by Egyptian police last month, praised Mubarak's announcement in a statement from jail. Nour called it "an important and courageous move" toward "comprehensive constitutional reform," in a statement read by his wife, Gamila Ismael.
The need for parliamentary approval, however, likely would deny participation by the outlawed Muslim Brotherhood, Egypt's largest Islamic group and probably the most powerful rival to Mubarak in any open vote. In a statement Saturday, the group -- whose supporters make up the largest opposition bloc in parliament -- demanded further reforms, including greater freedom to form political parties, and the end to Egypt's nearly 25-year-old emergency laws.