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CAIRO — President Mohamed Morsi agreed Monday to scale back a sweeping decree he had issued last week that raised his edicts above any judicial review, according to a report by a television network allied with his party. The agreement, reached with top judicial authorities, would leave most of Morsi’s actions subject to review by the courts but preserve a crucial power: protecting the constitutional council from being dissolved by the courts before it finishes its work.

The Muslim Brotherhood, the Islamist group that sponsored Morsi and his party, announced that it was canceling a major demonstration in support of the president that had been planned for Tuesday.

Cracks appeared in Morsi’s government Sunday over the decree after the justice minister, Ahmed Mekki, began arguing for a retreat, and at least three other senior advisers resigned over the measure. The move had also prompted widening street protests and cries from opponents that Morsi, who already governs without a legislature, was moving toward a new autocracy in Egypt, less than two years after the ouster of the strongman Hosni Mubarak.

With a threatened strike by the nation’s judges, a plunge in the country’s stock market and more street protests looming, Morsi’s administration initially sent mixed messages Sunday over whether it was willing to consider a compromise: A spokesman for the president’s party insisted that there would be no change in his edict, but a statement from the party indicated for the first time a willingness to give political opponents “guarantees against monopolizing the fateful decisions of the homeland in the absence of the Parliament.”

Mekki, the influential leader of a judicial independent movement under Mubarak and one of Morsi’s closest aides, actively tried to broker a deal with top jurists to resolve the crisis.

The reaction to the decree had presented the most acute test to date of the ability and willingness of Morsi, Egypt’s first freely elected president and a former leader of the Muslim Brotherhood, to engage in the kind of give and take that democratic government requires. But he also must contend with real doubts about the willingness of his anti-Islamist opponents to join him in compromise. Each side is mired in deep suspicion of the other, a legacy of the decades when the Brotherhood survived here only as an insular secret society, demonized as dangerous radicals by most of the Egyptian elite.

“There is a deep mistrust,” said Emad Shahin, a political scientist at the American University in Cairo who studies the Brotherhood. “It is an ugly round of partisan politics, a bone-crushing phase.”

The scale of the backlash against the decree appeared to catch Morsi’s government by surprise.

“In his head, the president thought that this would push us forward, but then it was met with all this inflammation,” Mekki said.

He faulted the president for failing to consult with his opponents before issuing it, but he also faulted the opponents for their own unwillingness to come to the table: “I blame all of Egypt, because they do not know how to talk to each other.”

Government and party officials maintained that Morsi was forced to claim the expansive new powers to protect the process of writing the country’s new constitution, and that the decree would be in effect only until the charter was in place.

A court of judges appointed under the Mubarak government was widely rumored to be about to dissolve the elected constitutional assembly, dominated by Morsi’s Islamist allies — just as the same court had previously cast out the newly elected Islamist-led Parliament — and the decree issued by Morsi on Thursday gave him the power to stop it.

“I see with all of you, clearly, that the court verdict is announced two or three weeks before the court session,” Morsi told his supporters Friday, referring to the pervasive rumors about the court’s impending action in a fiery speech defending his decree. “We will dissolve the entire homeland, as it seems! How is that? How? Those waywards must be held accountable.”

He said that corrupt Mubarak loyalists were “hiding under the cover of the judiciary” and declared, “I will uncover them!”

But instead of rallying the public to his side and speeding the country’s political transition, as Morsi evidently hoped, his decree has unleashed new instability across the country.

On Sunday, the first day of business here since the decree was issued, the Egyptian stock market fell by about 9.5 percent, erasing more than $4 billion of value.