CAIRO, Qahirah (AFP) - Thousands of supporters of Egypt's ousted Islamist president Mohamed Mursi on Thursday celebrated Eid al-Fitr, the end of the Muslim holy month of Ramadan, defying government calls for them to leave the streets.
However, there was no immediate sign that the government was readying to carry out its threat made on Wednesday to remove Islamist protest camps set up to demand Mr Mursi's reinstatement following his ouster by the army on July 3.
Under a cloud of balloons, thousands of men, women and children attended the dawn prayer marking the end of the fasting month in the Rabaa al-Adawiya and Al-Nahda squares, where Mr Mursi's supporters have been camped for weeks calling for his reinstatement.
Egypt's army-installed government vowed on Wednesday to remove the protest camps, saying it had refrained from doing so out of "solicitude for the holy month of Ramadan".
But leaders of the Muslim Brotherhood from which Mr Mursi hails called for rallies "until victory", raising fears of further bloody confrontations.
Giving warning of the looming showdown, government daily Al-Gumhuriya on Thursday ran the headlines "Last warning" and "The hour of battle approaches".
Several thousand supporters of the ousted president also marched in other parts of Egypt, including in Alexandria, the country's second city, and in Qena in the south.
The warning to the protesters came after Egypt's interim presidency said on Wednesday that Western and Arab efforts to mediate an end to the country's political deadlock had failed.
US Deputy Secretary of State William Burns left Cairo on Tuesday without making headway in finding a compromise between the government and Mr Morsi's supporters.
"These efforts have not achieved the hoped for results," the presidency said, referring to mediation by Mr Burns and EU envoy Bernardino Leon, who were among a string of diplomats who had travelled to Cairo.
The presidency said it "holds the Muslim Brotherhood completely responsible for the failure of these efforts, and for consequent events and developments relating to violations of the law and endangering public safety."
Egypt is deeply divided over Mr Mursi's ouster, and violence in the margins of demonstrations between his supporters and opponents has killed more than 250 people - mostly Mr Mursi's backers - since the end of June.
The government had already ordered police to end the sit-ins and protests, which it described as a "national security threat," but held off amid the intense diplomatic efforts to find a peaceful resolution.
UN chief Ban Ki Moon urged the release of Mr Mursi, who has been formally remanded in custody and is being held incommunicado at an undisclosed location.
Washington on Wednesday urged Egypt's military and political factions to resolve their differences through dialogue.
"We absolutely do not believe that the time for dialogue has passed. We will continue this conversation, and it certainly remains a priority of ours and obviously a priority of the EU and other officials around the world who've been involved," State Department spokeswoman Jen Psaki said.
Western envoys had pressured the Brotherhood to end its sit-ins, according to Islamists who attended the talks. They also demanded that the government release jailed Islamist leaders as a confidence-building measure.
Mr Mursi himself is being held on suspicion of having collaborated with Palestinian militants to kill policemen and stage jail breaks during an early 2011 uprising against strongman Hosni Mubarak, while Mr Mursi was in prison.
The Brotherhood's supreme guide Mohamed Badie and his deputies are to stand trial later this month on charges of inciting the shootings of protesters outside their headquarters on June 30.
The government says it is up to the judiciary to release prisoners. The Islamists say their release is a precondition for further talks on finding a settlement, which could include symbolically reinstating Mr Mursi, who would then call early elections.
Authorities have promised demonstrators a safe exit and said ending their protests would allow the Brotherhood to return to political life.
More than 80 protesters were killed in clashes with police at the main sit-in outside Cairo's Rabaa al-Adawiya mosque on June 27.
Over 50 people died in earlier clashes with soldiers outside an elite army base.