Egyptian soldiers separated supporters and opponents of President Hosni Mubarak in central Cairo on Thursday, deploying infantry to create a buffer zone in an attempt to halt violence between them.
A journalist at the scene said the opposing camps were separated by a distance of some 80 meters and that they army had urged Mubarak supporters to leave the square. It was the first time the army was seen to act decisively to halt the violence.
"The neutral zone is absolutely covered in fist-size rocks," said the reporter, referring to the projectiles the protesters had been hurling at each other.
In the overnight fighting, machine-gun fire echoed for more than an hour across the central square where protesters - unsatisfied by Mubarak's pledge to step down in September - have vowed to stay until the 82-year-old president quits.
"One way or another we will bring Mubarak down," some chanted in the early morning. "We will not give up, we will not sell out," others shouted.
Egyptian Health Minister Ahmed Samih Farid told state television five had died and 836 were wounded in fighting which first erupted on Wednesday, nine days into the anti-government demonstrations.
He said most of the casualties were due to stone throwing and attacks with metal rods and sticks.
The firing began at around 4 A.M. while hundreds of anti-government protesters camped out in the square.
With many protesters blaming the government for instigating the crackdown on the previously largely peaceful demonstrations, the United States has renewed its appeal to Mubarak to take steps towards democratic elections at once.
A senior U.S. official also said on Wednesday it was clear that "somebody loyal to Mubarak has unleashed these guys to try to intimidate the protesters".
Washington supplies the Egyptian army - which has ruled Egypt since toppling the monarchy in 1952 - annually with about $1.3 billion in aid.
But its options for leaning harder on Egypt to end the violence and begin a transfer of power are limited.
Egypt, which signed a peace treaty with Israel in 1979, justified the emergency rule which kept Mubarak in power as needed to curb Islamist militants and Washington is looking for a way forward which does not encourage even greater instability.
After Mubarak announced on Tuesday that he would stay in office until September and then step down, President Barack Obama telephoned him and said that change "must begin now". He stopped short of calling him to quit immediately.
On Wednesday chances of a peaceful resolution of the crisis receded when supporters of Mubarak, throwing petrol bombs, wielding sticks and charging on camels and horses, attacked protesters in Tahrir Square.
Officials said three people were killed in Wednesday's violence and more than 1,500 were wounded.
Reacting to the tumult in Egypt, White House spokesman Robert Gibbs said on Wednesday that, "If any of the violence is instigated by the government it should stop immediately."
Skirmishes between Mubarak supporters and protesters continued into the Wednesday night, and then after a brief lull, live television aired footage of fresh fighting, gunfire ringing out repeatedly across the square.
Two bodies were shown being pulled from the scene, while Mubarak supporters and protesters hurled stones at each other.
Black smoke billowed over the area.
By dawn, protesters had held their ground in the square, setting up iron barricades to protect themselves. "We cannot go back at this point," a 33-year-old woman told al Jazeera.
"Things have calmed down now but through the night, we were getting dozens of wounded every 15 minutes," Doctor Mohamed Abdel Hamid, who was in the square, said. "We had casualties all over the place.
Some questioned why the army had not intervened when the shooting broke out, though by dawn, military vehicles were deployed at the edge of the square and television showed footage of some men being arrested.
An estimated 150 people have been killed so far and there have been protests across the country. United Nations human rights chief Navi Pillay said up to 300 people may have died.
Egyptian Vice President Omar Suleiman on Wednesday urged the 2,000 demonstrators in Tahrir Square to leave and observe a curfew to restore calm. He said the start of dialogue with the reformists and opposition depended on an end to street protests.
But the opposition, which includes the Islamist Muslim Brotherhood and Nobel peace laureate Mohamed ElBaradei, have said they will not open talks until Mubarak quits.
"What happened yesterday (Wednesday) made us more determined to remove President Mubarak," the protest movement Kefaya, or Enough, said.
"There will be no negotiations with any member of Mubarak's regime after what happened yesterday and what is still happening in Tahrir Square," a spokesman told al Jazeera.
A Egyptian Foreign Ministry statement on Wednesday rejected U.S. and European calls for the transition to start immediately, saying they aimed to "incite the internal situation" in Egypt.
Oil prices have climbed on fears the unrest could spread to other authoritarian Arab states including oil giant Saudi Arabia or interfere with oil supplies from the Red Sea to the Mediterranean through the Suez Canal. Brent crude surpassed $103 a barrel on Thursday.
Some analysts suggested the violence could encourage a backlash against Mubarak both internationally and among those Egyptians who had accepted his pledge to step down in September.
Along with the United States, France, Germany and Britain have also urged a speedy transition.
But others feared he could either cling on to power, or hand over to a military ruler without allowing truly free and fair democratic elections.
"Mubarak fooled us all," one person in Tahrir Square shouted through a loudspeaker.