With the popular protests continuing, Mubarak's attempts at economic reform might fall on deaf ears [EPA]

Egyptian President Hosni Mubarak, facing a popular revolt against his rule, has ordered Ahmed Shafiq, the new prime minister to preserve subsidies, control inflation and provide more jobs.

Protesters who have rocked the nation of 80 million people, a key US ally in the Arab world, complain about surging prices and the growing inequality in the society but have also called for a new political system.

"I require you to bring back confidence in our economy," Mubarak said in a letter to Shafiq, read on TV on Sunday.

 "I trust your ability to implement economic policies that accord the highest concern to people's suffering.

"I stress that subsidy provisions in their different forms must not be tampered with and that your government just challenge all forms of corruption," Mubarak said.

'Wider participation'

Mubarak's letter to Shafiq hinted opposition parties could gain more freedoms but was short on specifics.

"I also stress the need for moving seriously and effectively towards more political reforms, in the constitution and legislation, via extensive dialogue with the parties ... allowing their wider participation."

Mubarak sacked his cabinet on Saturday after days of unprecedented demonstrations across the country, appointing former air force chief Ahmed Shafiq as his new prime minister.

But Shafiq has yet to name his cabinet.

Mubarak said Egyptians had expressed their legitimate demands during the past week of protests but that "religious slogans" had penetrated their ranks - a reference to the Muslim Brotherhood, Egypt's largest opposition group banned by the government.

He said they had "striven to cause chaos", leading to the disorder and looting of recent days.

Security forces suddenly withdrew from the streets of Egyptian cities en masse on Friday after spending the day combating the protests.

A report on the state news agency Mena on Sunday night said Mubarak had also discussed political reforms with US President Barack Obama in a telephone call.

"(Mubarak) expressed his determination to continue with more steps on political reform that respond to the aspirations of the Egyptian people for a free, democratic society," the agency said.

The six days of unrest have killed more than 100 people, rattled global investors and stunned regional and Western leaders who looked to Mubarak as a bulwark against Islamists and support for Middle East peace negotiations.

Source: Agencies