Mubarak resigns, army takes power

President Hosni Mubarak has resigned, handing his powers to the army and bringing to an end three decades of autocratic rule.

The announcement, which follows 18 days of continued mass demonstrations by the Egyptian people, was delivered at 5am (NZ time) by Vice President Omar Suleiman in a brief statement on state television.

"Because of the current circumstances in the country the president, Hosni Mubarak, has decided to step down, and the higher command of the army is taking control of the country," Mr Suleiman said.

The streets around central Cairo's Tahrir Square erupted in jubilation and celebrations were continuing into the night.

Less than 24 hours earlier, Mr Muburak had defiantly refused to resign in a televised speech, though he did hand over most of his powers to Mr Suleiman.

In response to the President's refusal, protesters had filled Tahrir Square and spread their encampments to the state television building and the presidential palace.

Both sites were heavily guarded, but the army didn't try to stop the marches and even tossed protesters food and let them climb on their tanks.

Earlier in the day, it was reported Mr Mubarak had left Cairo for his luxury residence in Sharm al-Sheik, a Sinai resort town.

Western world leaders have welcomed the resignation and expressed hope the army keep its commitment to elections and the installation of a civilian-led regime.

UK Prime Minister David Cameron said this was a "really precious moment of opportunity to have a government that can bring the people together" and called for a "move to civilian and democratic rule."

There was widespread jubilation throughout the Middle East and North Africa, including in Tunisia, where people overthrew their own president last month.

Arab League secretary-general Amr Moussa, a former Egyptian foreign minister, said it was an opportunity to build a national consensus.

Meanwhile, Iran described the resignation as a "great victory”, while the BBC reported dissidents had been rounded up for planning a demonstration. 

Foreign Minister Murray McCully said Mr Mubarak's decision  to step aside opened the door to a transition process that will still hold many challenges.

"The decision by President Mubarak to step aside will create the conditions for a peaceful and substantial transition. Hopefully this will enable a shift from protest and confrontation, to dialogue and cooperation. The stability of Egypt and the Middle East region depends upon this," Mr McCully said.

"We hope that the military, to whom power is now entrusted, will act with restraint and show respect for the wishes of the Egyptian people. The changes that have occurred in the past day are truly significant, but many challenges now lie ahead if we are to see a peaceful transition in Egypt and stability within the region," Mr McCully said.