Tens of thousands of people have attended rival mass rallies in Yemen's capital Sanaa, a week after some 50 people were shot dead at a protest.
Protesters predicted their biggest rally yet to demand the resignation of President Ali Abdullah Saleh.
Mr Saleh told a rally of his own supporters he was ready to hand over power, but only to "safe hands".
Soldiers fired in the air to hold back Saleh loyalists when they tried to march on the opposition rally.
In his speech, the president - who has been in office for more than three decades - condemned bloodshed but also urged his supporters to "stand firm".
He earlier denied that government forces had played any part in the shooting of demonstrators last week.
Amnesty International has warned the government against any further use of "deadly force", saying: "The government cannot just shoot its way out of this crisis."
Yemen, the Arab world's most impoverished nation, is a key ally in the US-led fight against al-Qaeda, which has established a strong presence there.
Two recent bomb plots against US targets - two American cargo planes in October and a Detroit-bound airliner in December 2009 - originated in Yemen.
Both the government and opposition have set up checkpoints in Sanaa and the streets are full of armed men.
There is real fear of a new confrontation, a BBC correspondent reports from the city.
According to an AFP news agency report, Friday's crowds number in the hundreds of thousands.
President Saleh, dressed in a smart suit and sunglasses, took the microphone before a huge crowd.
"We don't want power but we need to hand power over to safe hands, not to sick, resentful or corrupt hands," he said.
"We are against firing a single bullet and when we give concessions, this is to ensure there is no bloodshed," he added.
"We will remain steadfast and challenge them with all power we have."
Some Saleh loyalists were carrying guns and waving traditional Yemeni daggers at Friday's rally, Reuters news agency reports.
Others rode motorbikes with large posters of Mr Saleh affixed to them, waving flags and playing patriotic music.
"No to chaos, yes to security and stability," banners read.
Mr Saleh has said the unrest risks taking Yemen into civil war. Several senior officials have left his side to go to the opposition.
In another part of the city, on a square near the university where protesters have been camped out since February, tens of thousands gathered for an anti-Saleh demonstration.
An Associated Press news agency report estimated that the crowd there was bigger than the rally in support of the president, despite attempts by the authorities to restrict access to the city centre.
Demonstrators chanted slogans calling for Mr Saleh's removal and waved red cards emblazoned with the word "leave".
Affrah, a protester and blogger in Sanaa, told the BBC the president could step aside earlier if he chose: "He keeps repeating that violence will happen, chaos will happen. It's really not going to happen, he's the one who will start it."
She said she was determined to carry on fighting for democracy even though she had received threats.
"Someone... sent me a [Facebook] message giving me private details about my mother, my sister and telling me that apparently I don't want to live in security.
"Nevertheless, I am continuing. We deserve a better life than this, we deserve a better life full of democracy and freedom and people speaking their minds without any kind of fear or any kind of limitation."
Student Abdullah Jabali, 33, told Reuters at Friday's rally that he did not believe Mr Saleh's promises to stand down within a year.
"I came here to get rid of this butcher because he killed our comrades," he said.
On Wednesday, Yemen's parliament passed sweeping emergency laws giving the security forces far-reaching powers to detain suspects and prevent demonstrations.
Amnesty International responded on Friday by saying: "After the horrific killing of dozens of protesters last Friday, it is incredibly disturbing that Yemen's leaders have given the security forces more powers through a new emergency law instead of reining them in."
Yemen is one of a number of countries in the region that have seen unrest since the presidents of Egypt and Tunisia were ousted in popular revolts.