Thousands of demonstrators have gathered in the centre of the Tunisian capital, Tunis, calling for President Zine al-Abidine Ben Ali to leave office immediately.
His speech came after weeks of protests that have left at least 23 dead.
A BBC correspondent in Tunis says security forces are surrounding the protesters but have not yet intervened.
Tunisia has not seen such protests in the 23 years since Mr Ben Ali came to power, says the BBC's Adam Mynott in Tunisia.
Trade unions have called on people to observe a general strike on Friday.
Our correspondent, who is outside the interior ministry in Tunis, says between 6,000 and 7,000 people have gathered, testing the president's promises of greater freedom of expression.
They are saying Mr Ben Ali must go and that Tunisia cannot have true democracy while he remains in charge.
This is in reaction to the president's speech, our correspondent says, but probably not the reaction he was expecting.
Human rights groups say more than 60 people have died in weeks of unrest across the country, as security forces responded to people protesting over corruption, unemployment levels and high food prices.
Meanwhile, UK tour operator Thomas Cook is pulling out all its customers currently on holiday in Tunisia. A spokesperson for the company said six special flights had been laid on to repatriate its tour groups.
Thomas Cook says it currently has about 1,800 holidaymakers in Tunisia.
"Although there has been no specific problems for our holidaymakers, their well-being is our primary concern so, as a precaution, we've taken the decision to bring them back to the UK as soon as we can, using our fleet of aircraft today," said a Thomas Cook spokesperson.
Tourism is key to Tunisia's economy and an important source of jobs.
The UK, the US and France are all advising against non-essential travel to Tunisia.
In his speech on Thursday night, Mr Ben Ali said there was "no presidency for life" in Tunisia.
Mr Ben Ali pledged to take action on food prices and end internet censorship |
Tunisian commentator Intissar Kherigi told the BBC Mr Ben Ali's time in office had been marked by continued infringements of human rights.
"During this time, there's been sustained human rights violations; torture, disappearance of journalists, of political opposition, all banning of all independent organisations, trade unions," he asserted.
"Not a single human rights organisation is allowed to operate freely in the country... So unfortunately the record does not really give us much hope."
Mr Ben Ali, 74, is only Tunisia's second president since independence from France in 1956. He was last re-elected in 2009 with 89.62% of the vote.
In his speech, he said he did not intend to amend the constitution to remove the upper age limit for presidential candidates, which would have allowed him to stand for a further term in 2014.
The president, who earlier this week had blamed the unrest on "terrorists", also said he felt "very, very deep and massive regret" over the deaths of civilians in the protests.
He said he had ordered troops to stop firing on protesters except in self defence, and pledged to take action on food prices, which have gone up fourfold in recent weeks.
Afterwards, Mr Ben Ali's supporters took to the streets of Tunis, cheering and sounding car horns.
In a further overture, foreign minister Kamel Mourjane said it would be possible to form a government of national unity involving the opposition.
Speaking to France's Europe 1 radio on Friday, he also held out the possibility of early parliamentary elections.
Tunisia's main opposition leader, Najib Chebbi, called the president's announcement "very good", but said he was awaiting "concrete details".
Mustapha Ben Jaafar, head of the Democratic Forum for Work and Liberties, said the speech "opens up possibilities".
'Educate workforce'
On Thursday, US Secretary of State Hillary Clinton warned Arab leaders they would face growing unrest unless they enacted real economic and political reform.
Mrs Clinton was speaking in Doha at the end of a four-nation visit to the Gulf.
"It is hard to have the kind of economic climate that is needed without making some of the social reforms that are required," she said.
"Put aside the critical issue of political freedoms, human rights and democracy that we have been discussing, focus on social conditions.
If you do not have an educated workforce, it is very hard to grow the economy to the extent that it should grow."
The protests in Tunisia began in mid-December in the southern town of Sidi Bouzid, after an unemployed graduate set himself on fire when police tried to prevent him from selling vegetables without a permit. He died a few weeks later.
Earlier this week, Mr Ben Ali sacked his interior minister and promised to create 300,000 new jobs.
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