CAIRO, (Reuters) – Egypt’s Prime Minister Ahmed Shafiq resigned on Thursday and the military asked a former transport minister to form a new government which pro-democracy activists want to be purged of Hosni Mubarak’s old guard.

Shafiq was appointed prime minister by Mubarak in his final days in office before he was ousted on February 11 after an 18-day popular uprising which shook the Middle East. There have since been protests and political pressure for Shafiq to step down.

Reform campaigner Mohamed ElBaradei told Reuters Shafiq’s resignation showed the military was responding to popular demands. He said it should now also adjust the timetable for elections to give candidates more time to prepare.

One Shafiq aide said appointing Essam Sharaf prime minister was timed to defuse calls for another mass demonstration on Friday after a first modest reshuffle by Shafiq failed to mollify protesters who want a clean break with the Mubarak era.

“There was fear of Friday’s protests and how big they may be. He actually wanted to leave before this week as well and does not want to agitate the people,” the aide said.

An army source said Sharaf was meeting with the Supreme Council of the Armed Forces to discuss the new cabinet he will announce early next week.

The Muslim Brotherhood and other political groupings had also been calling for Shafiq and his government to step aside and the army, in an apparent response had vowed to halt any “counter-revolution” from hijacking Egypt’s revolution.

The uprising in Egypt, a key U.S. ally with a peace treaty with Israel, fuelled revolts against other autocrats in the region. Progress towards democracy in the Arab world’s most populous nation will also have an effect on its neighbours.

The key jobs of foreign, interior and justice ministers were also likely to be reshuffled shortly, an army source said, to cleanse the government of remaining links to Mubarak.

Since Mubarak’s overthrow, hundreds of thousands of Egyptians have turned out in Cairo’s Tahrir Square and other cities to celebrate his downfall and send a message to the military that the people will not be ignored.

Protesters, some of whom have erected tents in Tahrir Square, greeted the news of Shafiq’s resignation with jubilation and relief. They applauded the armed forces for meeting their demands and chanted: “The people and the army are united.”

The Council of the Protectors of the Revolution, a body of technocrats and political figures, welcomed Sharaf as premier. But not everyone was as positive.

“This is a change for the worse not for the better,” said Hassan Nafaa, a political scientist at Cairo University who also actively campaigned against Mubarak, adding:

“Shafiq left but the one who has been installed has no political vision or anything to do with politics. There are other interests being secured that are thwarting change.”

PRESIDENTIAL CANDIDATES

Shafiq, a former air force commander, has been tipped by one military source as a potential contender for the presidency in a forthcoming election. Since 1952, all of Egypt’s presidents have been drawn from the armed forces.

Arab League Secretary-General Amr Moussa, a former Egyptian foreign minister, has emerged as an early frontrunner after announcing his candidacy. ElBaradei is also seen as a candidate.

“This is a question I do not have to answer today,” he said when asked by Reuters whether he would run. “I need to complete what I set to do which is to shift Egypt from a dictatorship to a liberated Egypt. We will see as we go along.”

Activists had demanded a new line up of technocrats as ministers after 30 years of Mubarak’s rule. The cabinet will act as an interim government while Egypt holds a referendum on constitutional amendments in March before a parliamentary vote and then a presidential election, according to current plans.

But with more and more political reformers demanding a longer period to get ready for parliamentary elections, the military council could be forced to change its plans.

“When the military took this on they had hoped it would be a one, two, three: ‘You get your amendments, we’ll have these two elections and we’re gone’,” a Western diplomat said.

“But it seems the people of Egypt need more, so bit by bit, we are seeing the Supreme Council having to grapple with this.

“What they are finding out is that this period of transition requires much more of them than perhaps they initially thought. There has been this constant back and forth with the opposition,” the diplomat said.

Reform to the constitution will make it much easier for Egyptians to run for the presidency, removing requirements which made it almost impossible for anyone but the ruling party and representatives of weak opposition parties to field candidates.

Some opposition figures are concerned that a rush towards elections is not in the best interests of democratic change. Mubarak’s administration had suppressed opposition groups for decades and they say they need time to regroup.

They say only the Muslim Brotherhood, which was formally banned under Mubarak, is in the position to mount an election campaign, though the group says it will not seek a majority in parliament or the presidency.

A quick election would also suit the remnants of the National Democratic Party, the ruling party which had dominated parliament under Mubarak and whose headquarters on the bank of the Nile were burnt down during the revolution.