Egyptian President Mohamed Morsi has told the country's senior judges that he did not infringe on their authority when he seized near absolute powers.
An aide to Morsi said the decree was limited to "sovereignty-related issues,'' but that did not satisfy his critics.
The uncompromising stance came during Monday's meeting between Morsi and members of the Supreme Judiciary Council in a bid to resolve a four-day crisis that has plunged the country into a new round of turmoil with clashes between the two sides that have left one protester dead and hundreds wounded.
The judiciary, the main target of Morsi's edicts, also has pushed back, calling the decrees a power grab and an "assault'' on the branch's independence.
Judges and prosecutors stayed away from many courts in Cairo and other cities on Sunday and Monday.
Meanwhile, the Muslim Brotherhood has called off a mass demonstration in Cairo, originally planned for Tuesday, "until futher notice" in order to "avoid clashes".
"There is no room for dialogue when a dictator imposes the most oppressive, abhorrent measures..."
- Mohamed ElBaradei,
Prominent opposition leader
Activists on Monday were camped in Cairo's Tahrir Square for a fourth day, blocking traffic with makeshift barricades to protest against what they said was a power-grab by Morsi. Nearby, riot police and protesters clashed intermittently.
Mona Amer, spokesman for the opposition movement Popular Current, said Tuesday's protest would go on.
"We asked for the cancellation of the decree and that did not happen," she said.
Before the president's announcement, leftist politician Hamdeen Sabahy said protests would continue until the decree was scrapped and said Tahrir would be a model of an "Egypt that will not accept a new dictator because it brought down the old one".
Morsi's office repeated assurances that the measures would be temporary, and said he wanted dialogue with political groups to find "common ground" over what should go in Egypt's constitution, one of the issues at the heart of the crisis.
Hassan Nafaa, a professor of political science at Cairo University, saw an effort by the presidency and judiciary to resolve the crisis, but added their statements were "vague".
"The situation is heading towards more trouble," he said.
Sunday's stock market fall of nearly ten per cent - halted only by automatic curbs - was the worst since the uprising that toppled former President Hosni Mubarak in February, 2011.
"We are back to square one, politically, socially," said Mohamed Radwan of Pharos Securities, an Egyptian brokerage firm.
Morsi's decree marks an effort to consolidate his influence after he successfully sidelined Mubarak-era generals in August, and reflects his suspicions of a judiciary little reformed since the fall of his predecessor.
Issued just a day after Morsi received glowing tributes from Washington for his work brokering a deal to end eight days of Israeli attacks on Gaza, the decree drew warnings from the West to uphold democracy.
'Protect the revolution'
The Morsi administration has defended his decree as an effort to speed up reforms that will complete Egypt's democratic transformation.
| According to President Morsi's decree, no authority
can revoke presidential decisions [Reuters]
But his calls for dialogue have been rejected by members of the National Salvation Front, a new opposition coalition of liberals, leftists and other politicians and parties, who until Morsi's decree had been a fractious bunch struggling to unite.
The Front includes Sabahy, Nobel Peace Prize laureate Mohamed ElBaradei and former Arab League chief Amr Moussa.
The military has stayed out of the crisis after leading Egypt through a messy 16-month transition to a presidential election in June.
Analysts say Morsi neutralised the army when he sacked top generals in August, appointing a new generation who now owe their advancement to the president.
Though the military still wields influence through business interests and a security role, it is out of frontline politics.
"There is no room for dialogue when a dictator imposes the most oppressive, abhorrent measures and then says 'let us split the difference'," ElBaradei said on Saturday.
Morsi framed his decisions on Thursday as necessary to protect the revolution that toppled Mubarak nearly two years ago and to cement the nation's transition to democratic rule.
Morsi also ordered the retrial of Mubarak and top aides on charges of killing protesters during the uprising.
"He had to act to save the country and protect the course of the revolution,'' Pakinam al-Sharqawi, one of Morsi's aides, said.
"It is a major stage in the process of completing the January 25th revolution,'' she said, alluding to the starting day of last year's uprising against Mubarak.
He also created a new "protection of the revolution'' judicial body to swiftly carry out the prosecutions.