Police arrested el-Erian, spokesman for the banned Muslim Brotherhood and a former lawmaker, on Friday hours before large numbers of the organisation's supporters staged protests in Cairo and other Egyptian cities calling for political reforms.
Prosecution officials later ordered his detention for 15 days to investigate charges of belonging to a banned group and organising Muslim Brotherhood protests on Wednesday in six provinces without permission.
"El-Erian told his interrogators that he will stand as a candidate in the presidential election," said el-Erian's lawyer, Abdel Moneim Abdel Maqssoud, who was present while state security officers questioned the detained leader.
Deputy Brotherhood leader Mohammed Seyed Habib confirmed reports that el-Erian had announced his intention to run, but denied his group had nominated a presidential candidate.
"We haven't decided yet if we will have a candidate"
Mohammed Seyed Habib, Deputy leader of Muslim Brotherhood
"We haven't decided yet if we will have a candidate," said Habib, adding, el-Erian, a doctor, had made his candidacy without consulting with the group's leadership.
"That was perhaps a personal decision."
If he eventually does stand, el-Erian would have to run as an independent as the brotherhood has been outlawed as a political party since 1954.
El-Erian, in his 50s, and three other Muslim Brotherhood leaders were detained hours before police rounded up another 200 supporters of Egypt's oldest Islamic group during nationwide protests. It was the second day this week that the group held widespread protests demanding political reforms.
The interior ministry said the members were arrested "after refusing orders to disperse and continued demonstrating in a way that harms security considerations".
El-Erian spent five years jailed during the 1990s after being charged with belonging to a banned group trying to change the government in Egypt to an Islamic state. Parliament is due to vote on Tuesday on a constitutional amendment making it possible for more than one candidate to stand in the elections.
But fellow Muslim Brotherhood member Ali Abdel Fattah said draft regulations within the amendment would limit el-Erian's chances of contesting the elections.
Police arrested more than 1500
protestors at a rally just on Friday
The draft, announced on Thursday by the chief of Mubarak's ruling National Democratic Party, says candidates standing as independents must obtain at least 300 recommendations from elected lawmakers representing the NDP-dominated Peoples' Assembly, consultative Shura Council and local city councils.
"We know that such an impossible condition was created to deprive the Brotherhood from running in the elections,"
Meanwhile, police released 135 members of the banned Muslim Brotherhood detained in a crackdown after nationwide demonstrations, but more than 1500 are still being held, security sources said on Saturday.
Police released members of the group in El Minya, about 220km south of Cairo, the sources said.
Usually, such detentions can last just a few hours, but sometimes can also be extended to last several weeks or more.