Egypt's President Mohamed Morsi will respect a court ruling overturning his decree for the dissolved Islamist-dominated parliament to convene, his office said on Wednesday amid a power struggle with the military.

The statement appears aimed at mollifying an infuriated judiciary, which has been placed at the forefront of the complex struggle between powerful generals adjusting to their new Islamist president.

"If yesterday's constitutional court ruling prevents parliament from fulfilling its responsibilities, we will respect that because we are a state of the law," the statement said, a day after the court froze Morsi's decree.

"There will be consultations with (political) forces and institutions and the supreme council for legal authorities to pave a suitable way out of this," the statement added.

Last week, Morsi ordered parliament to convene in defiance of a military decision to disband the house in line with a court ruling last month, before the generals handed power to the president.

Morsi's decree was applauded by supporters who believed the court's decision to disband parliament was political, but it set off a fire storm of criticism from opponents who accused him of overstepping his authority.

According to the country's interim constitution, drafted by the military generals who took charge after President Hosni Mubarak's overthrow early last year, the military assumed the dissolved parliament's powers.

Morsi's decision was seen as an opening shot in a power struggle between Egypt's first civilian leader and the Mubarak-appointed generals who wanted to retain broad powers even after they transferred control on June 30.

"The battle for power centred on the judiciary," read the headline of independent daily Al-Watan on Wednesday.

On Sunday, Morsi had ordered parliament back and invited it to convene. Taking its cue from the president, the People's Assembly met on Tuesday.

"We are gathered today to review the court rulings, the ruling of the Supreme Constitutional Court," speaker Saad al-Katatni said.

"I want to stress, we are not contradicting the ruling, but looking at a mechanism for the implementation of the ruling of the respected court. There is no other agenda today," he added.

According to Morsi's decree, new parliamentary elections are to be held after a constituent assembly picked by the legislature finishes a constitution.

But the assembly's fate is in doubt, with the administrative court deciding on Wednesday to look into complaints on the panel's legality next Tuesday rather than in September as had been scheduled, the official MENA news agency reported.

Should the court declare the parliament appointed assembly illegal, the military will appoint a new one, as stipulated in its interim constitution.

The origins of the battle for parliament lay in the constitutional declaration issued by the Supreme Council of the Armed Forces (SCAF), which ruled Egypt during its transition after President Hosni Mubarak was ousted last year.

The declaration, which acts as a temporary constitution until a new one is drafted, granted the military sweeping powers, including legislative control, and rendering the presidential post little more than symbolic.

The SCAF consists of generals appointed by Mubarak, as was the head of the constitutional court which annulled parliament because it found that certain articles of the law governing its election invalid.

Critics said the decision was politically motivated.

"The constitutional court whose judges were appointed by Mubarak has cancelled the president's decree and restored the field marshal's decree," wrote prominent commentator Alaa al-Aswany, referring to SCAF head Hussein Tantawi.

"The message is clear, the elected president is not to exercise power without the military," he said.

But others saw in Morsi's decree a constitutional coup which showed little regard for the judiciary or democracy.

"The constitutional court returns the slap to the president," wrote the liberal Al-Wafd, mouthpiece for the Wafd party, whose MPs boycotted Tuesday's parliamentary session.

Thousands of protesters rallied Tuesday evening in Tahrir Square, hub of the 2011 revolution, in support of Morsi and chanting "Down with the military" and other slogans hostile to judges and allegedly anti-Islamist TV anchors.

Opponents of Morsi's decree earlier protested outside the presidential palace.

Speaker Katatni said parliament had referred the case invalidating the house to the Court of Cassation.

US Secretary of State Hillary Clinton, who is due to visit Cairo on Saturday, urged all parties to engage in dialogue.

"We urge that there be intensive dialogue among all of the stakeholders in order to ensure that there is a clear path for them to be following," the chief US diplomat said after talks in Vietnam.

The Egyptian people should "get what they protested for and what they voted for, which is a fully elected government making the decisions for the country going forward," she added.