Field Marshal Husein Tantawi, head of the Supreme Council of the Armed Forces, said the formation of the new government was imminent, state media reported Sunday.
CNN said the announcement came after the speaker of the Parliament's lower House said the session would be suspended for a week in protest over the council's refusal to dismiss the current civilian government headed by Kamal Ganzouri, who was prime minister under deposed President Hosni Mubarak.
Ganzouri remained in power even after the Muslim Brotherhood's political arm, the Freedom and Justice Party, gained the majority of seats in the recent parliamentary election. Speaker Saad el-Katatni represents the Freedom and Justice Party.
It was not clear Sunday if the Freedom and Justice Party would be part of the new government.
The announcement came a day after a high-profile reform leader announced the formation of a new political party aimed specifically at paving the way for the military to hand over power to civilians.
Mohamed ElBaradei, the former head of the International Atomic Energy Agency, said the Constitution Party would help preserve the gains of the recent revolution. He said political paralysis and questions about the legitimacy of the military council had plunged Egypt into a "lawless" state.
Ahram Online said ElBaradei was among several founding members, which included activists, legal experts and government officials.