The violence continued despite Field Marshal Hussein Tantawi, who has run the ruling military council since Hosni Mubarak was forced from power in February, promising a civilian president would be elected in June next year.
Police used tear gas and rubber bullets to keep the protesters out of the interior ministry, a sprawling complex in a street close to Tahrir Square, where thousands of people have been gathered since Friday.
The demonstrators, some of them using doors as makeshift shields, threw thousands of stones at the security forces.
A truce brokered by Muslim clerics stalled the fighting for a short time in the afternoon.
Both sides pulled back from the front-line street and state television broadcast footage showing army soldiers forming a human chain between the protesters and the police in a bid to stop the violence.
However, the violence resumed in the evening with a fresh barrage of gas canisters from the security forces and rocks thrown by the protesters.
Foreign affairs editor Tim Marshall, in Cairo, said: "Up near the interior ministry it is a world of explosions and fires and tear gas. You can feel the revolution in the air.
"Back in Tahrir Square you hear the chants and the depth of feeling.
"But go a little bit further out from there and you don't feel revolution is in the air, because the rest of Cairo is calm and most of Egypt is calm.
"At the moment the military is holding firm. They have made their offer and they are not about to resign en masse right now.
"I think the reason for that is they want more to time to engineer the electoral process to make sure they get their placemen in place so they can carry on and protect their economic interests."
Field Marshall Tantawi said in his televised address that he would appoint a new national salvation government to replace the much-criticised cabinet of Essam Sharif, which resigned on Sunday.
The decision to bring forward presidential elections followed a meeting between the army and politicians.
He also suggested a referendum on the immediate transfer of power to a civilian administration, but that suggestion was derided by the protesters.
Field Marshal Tantawi also confirmed Egypt's parliamentary elections would begin on Monday as planned. However, they will take until January to complete.
In further concessions, the government ordered the release of 312 protesters detained over the past days and instructed civilian prosecutors to take over an investigation into the death of 27 people, mostly Christians, in a protest on October 9.
British foreign secretary William Hague called on Egyptian authorities to respect the right of peaceful protest.
"I am deeply concerned by the unacceptable violence and loss of life which has taken place around Tahrir Square in Cairo and in other parts of Egypt," he said.
"I am particularly concerned by reports of dangerous forms of gas being used against protesters as well as live ammunition. Our thoughts are with all those who have been injured or bereaved."
The security forces have denied using live ammunition against the protesters but doctors say they have received patients with apparent bullet wounds and witnesses have reportedly found empty casings.
Shady el-Nagar, a doctor in one of Tahrir's field hospitals, said three bodies arrived in the facility on Wednesday. All three had bullet wounds.
"We don't know if these were caused by live ammunition or pellets because pellets can be deadly when fired from a short distance," he said.
Navi Pillay, the UN High Commissioner for Human Rights, deplored the role of Egypt's security forces in attempting to crackdown on the demonstrations.
"Some of the images coming out of Tahrir, including the brutal beating of already subdued protesters, are deeply shocking, as are the reports of unarmed protesters being shot in the head," she said.
"There should be a prompt, impartial and independent investigation, and accountability for those found responsible for the abuses that have taken place should be ensured."
The US has also called for an end to the violence in the country.
White House spokesman Jay Carney said: "We are deeply concerned about the violence. The violence is deplorable. We call on all sides to exercise restraint.
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