Tens of thousands of protesters gathered in Cairo's Tahrir Square Saturday, to demonstrate against Egypt's military rule as tensions escalate just two days before parliamentary elections, despite an offer of compromise from the country's prime minister.

The protesters' anger has been stoked by the decision of military rulers Friday to appoint as prime minister a man who served under deposed president Hosni Mubarak.

State TV said Prime Minister Kamal el-Ganzouri, who served under Mubarak, offered cabinet positions and was also mulling the formation of an advisory council composed of leading democracy advocates and presidential hopefuls.

State TV also said Field Marshal Hussein Tantawi, the head of the ruling military council that took power after Mubarak was ousted in February, met with opposition leader Mohamed ElBaradei and presidential hopeful Amr Moussa, who was the former head of the Arab League. Details of the meeting were not immediately known.

El-Ganzouri's offer failed to disperse the protesters who packed into the square while organizers called for another mass rally on Sunday.

In Tahrir Square, one protester told CTV's Middle East Bureau Chief Martin Seemungal: "Sixty years of military rule and 10 months of lies, that's more than enough for us."

Still most want to see the elections go ahead as planned.

"These people aren't against the elections," demonstrater Amer Hosny told CTV News. "This is our first chance to have a value for our vote."

In a clash with security forces outside the cabinet building a few blocks from Tahrir Square earlier Saturday, one man was killed when he was run over by an armoured vehicle, but there were conflicting accounts about the circumstances surrounding the death.

Hundreds had gathered to prevent el-Ganzouri from entering the cabinet building to take up his new post.

An Associated Press cameraman saw three police troop carriers and an armoured vehicle firing tear gas as they were being chased from the site by rock-throwing protesters.

The United States has increased pressure on Egypt's military rulers, who took over from Mubarak, to transfer power to civilian leaders. The administration of U.S. President Barack Obama has thrown its support behind the protesters who have occupied Tahrir Square for more than a week.

The Interior Ministry expressed regret for the death of the protester, identified as Ahmed Serour, and said it was an accident.

Police claimed they had no intention of disrupting the protest, explaining in a statement they were heading to the nearby Interior Ministry when they came under attack by protesters throwing firebombs. The ministry claimed security forces were injured and the driver of one of the vehicles panicked and ran over the protester.

One of the protesters, Mohammed Zaghloul, 21, said he saw six security vehicles heading to their site.

"It became very tense, rock throwing started and the police cars were driving like crazy," he said. "Police threw one tear gas canister and all of a sudden we saw our people carrying the body of a man who was bleeding really badly."

Officials say more than 40 people have been killed across the country since Nov. 19, when the unrest began after security forces violently disbanded a small sit-in by protesters injured during the earlier uprising that ousted Mubarak. That led to days of clashes, which ended with a truce on Thursday.

The military's appointment of el-Ganzouri, its apology for the death of protesters and a series of partial concessions in the past two days suggest that the generals are struggling to overcome the most serious challenge to their nine-month rule, with fewer options now available to them.

The latest crisis has overshadowed Egypt's first parliamentary elections since Mubarak was replaced by Field Marshal Hussein Tantawi. The vote, which the generals say will be held on schedule Monday despite the unrest, is now seen by many activists and protesters to be serving the military's efforts to project an image of itself as the nation's saviours and true democrats.

The next parliament is expected to be dominated by the country's most organized Muslim Brotherhood group, who decided to boycott the ongoing protests in order to avoid derailing the election.

But the protests have also had an impact on Egypt's fragile economy, one that depends on tourism for 10 per cent of its gross domestic product. In the months since Mubarak's ouster in February, the 7 per cent annual growth rate has plunged to an anemic forecast of only about 1 per cent this year.

Each day, the stock market slips and foreign reserves have fallen by almost 40 per cent from $36 billion at the end of 2010 to $22 billion. Some of that money has gone to support the Egyptian pound, which economists fear could face severe depreciation if officials don't shore up the country's finances.

With tourism in a downturn because of demonstrations in the streets, unemployment has climbed to almost 12 per cent in the third quarter of 2011, compared with just shy of 9 per cent a year earlier.

Already nearly half the population of more than 80 million lives near or below the poverty line set by the World Bank of $2 a day.

"Why can't they see that they're destroying the country," railed Mohammed El-Sharkawy, an accountant who moonlights as an electrician to make ends meet. The activists say "they want democracy and freedom, but don't understand that it comes with responsibility."

With files from CTV's Middle East Bureau Chief Martin Seemungal and The Associated Press