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The source said that Mubarak has relied on a respirator in an intensive care unit of a military hospital in Cairo since he was transferred from Tora Prison Tuesday evening after suffering a stroke.
A Xinhua reporter at the hospital said men in plainclothes were stationed near the hospital, admitting no entry.
There is currently no official report from the hospital authorities on Mubarak's condition.
Egypt's official MENA news agency had earlier quoted medical sources as saying that his "heart stopped beating and he was defibrillated many times but he had not responded."
Prison sources said that the 84-year-old has suffered from shortness of breath and severe depression since he was given a life sentence on June 2 and barred up in prison.
The Egyptian people have confronting feelings towards Mubarak, who was ousted last February.
Dozens of supporters showed up at the gate of the hospital, some were holding Mubarak's photo while others praying for him.
"He is a hero of Egypt. He deserves our respect," said a middle-aged woman. But she was sharply interrupted by a young man who called her a liar.
"He should be hanged, Mubarak betrayed his people," the man shouted.
Police in plain clothes appeared and dragged out the young man before the argument could escalate.
Mubarak's health concerns added more uncertainty to the country's situation as the rally on Tahrir Square fueled fresh instability ahead of the official announcement of the presidential winner scheduled on Thursday.
Both candidates, the Muslim Brotherhood's Mohammed Morsi and Mubarak's former prime minister Ahmed Shafiq, claimed Tuesday victory in last weekend's presidential election.
On the iconic Tahrir Square, thousands of Egyptians gathered to protest against the military council and the dissolution of the parliament.
"For all the Egyptians who hate Mubarak, his death would be a great relief," said Hasheem, a man in his thirties.
"Mubarak is a dictator, he should be hanged rather than receive life imprisonment. We are all waiting for his death," he added.
Ahmed, a 27-year-old engineer, told Xinhua that the majority of Egyptian youth don't care so much about Mubarak right now.
"I don't care about his death at all right now. He left nothing to me but a military council which is still working under his will," said Ahmed.
"We care more about our future. We are more concerned about who will replace Mubarak. He has become history," Ahmed said.
Some protestors chanted "void constitutional declaration" and "people want full powers for the president," while others appealed for executive powers to be transferred to the coming president.
The army and police forces have secured the People's Assembly building, where unrest brewed.
The Muslim Brotherhood, Wasat party, Free Front for Peaceful Change, and campaigners for defeated presidential candidates Hamdeen Sabahi and Abou Foutouh, joined the protest.
On Sunday night, the ruling Supreme Council of the Armed Forces(SCAF) issued a supplementary constitutional declaration to retake legislative powers after the parliament was dissolved several days ago.
According to the document, the SCAF will exercise legislative powers until a new parliament is elected, raising concerns that the coming president will not enjoy full powers.
"The SCAF's supplementary constitution means that ... the constitution keeps the most important powers in the SCAF's hands, we want a president with powers not an image of a president," Ramy Mohamed, a member of the April 6 movement said.
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