DAMASCUS, Syria - Syrian President Bashar al-Assad accepted his government's resignation on Tuesday after nearly two weeks of unrest that has posed the gravest challenge to his 11-year rule.

But the move was unlikely to satisfy protester demands since the cabinet has little authority in Syria, where power is concentrated in the hands of Assad, his family and the security apparatus.

Hundreds of thousands of Syrians held pro-government rallies on Tuesday, awaiting a speech in which Assad was expected to announce a decision on lifting emergency laws that have served to crush dissent for almost 50 years.

That is a key demand of anti-government demonstrations in which more than 60 people have been killed.

"President Assad accepts the government's resignation," the state news agency SANA said, adding that Naji al-Otari, the prime minister since 2003, would remain caretaker until a new government was formed.

Protesters at first had limited their demands to greater freedoms. But, increasingly incensed by a security crackdown on them, especially in the southern city of Deraa where protests first erupted, they now call for the "downfall of the regime".

Syrian state television showed people in the Syrian capital Damascus and in Aleppo, Hama and Hasaka waving the national flag, pictures of Assad and chanting "God, Syria, Bashar".

"Breaking News: the conspiracy has failed!" declared one banner, echoing government accusations that foreign elements and armed gangs are behind the unrest. "With our blood and our souls we protect our national unity," another said.

Employees and members of unions controlled by Assad's Baath Party, which has been in power since a 1963 coup, said they had been ordered to attend the rallies, where there was a heavy presence of security police.

All gatherings and demonstrations not sponsored by the state are banned in Syria, a country of 22 million at the sensitive heart of generations of Middle East conflict.

Media organizations operate in Syria under restrictions.

The government has expelled three Reuters journalists in recent days - its senior foreign correspondent in Damascus and then a two-man television crew who were detained for two days before being deported back to their home base in neighboring Lebanon.

More than two hundred protesters gathered in Deraa chanting for freedom and "God, Syria, and Freedom" and "O Hauran rise up in revolt", a reference to the plateau Deraa lies on.

Deraa is a bastion of tribes belonging to Syria's Sunni Muslim majority, many of whom resent the power and wealth amassed by the elites of the Alawite minority to which Assad belongs. Latakia, a religiously-mixed key port city has also witnessed clashes, raising fears the unrest could take on violent sectarian undertones.

The government has said Syria is the target of a project to sow sectarian strife.

"If things go south in Syria, blood-thirsty sectarian demons risk being unleashed, and the entire region could be consumed in an orgy of violence," wrote Patrick Seale, author of a book on Hafez al-Assad, on the Foreign Policy blog.

Bordered by Iraq, Jordan, Turkey, Lebanon and Israel, Syria maintains a strong anti-Israeli position through its alliances with Shiite regional heavyweight Iran and Lebanon's Hezbollah, as well as Palestinian Islamist militant group Hamas. It has also reasserted influence in smaller neighbor Lebanon.

Vice-President Farouq al-Shara said on Monday the 45-year-old president would give a speech in the next 48 hours that would "assure the people".

Agence France-Presse