Failing to reach a consensus, "is in the interest of neither side. The nation as a whole will pay the price," the military said, adding it "realizes its national responsibility in protecting the nation's higher interests" and state institutions.
Images of the military's elite Republican Guards unit surrounding the area around the palace also showed one of the most high-profile troop deployment since the army handed over power to Morsi on June 30.
A sit-in by Morsi's opponents around the palace continued Saturday, with protesters setting up roadblocks with tanks behind them amid reports that the president's supporters planned rival protests. By midday Saturday, TV footage showed the military setting up a new wall of cement blocks around the palace.
The president has insisted his decrees were meant to protect the country's transition to democracy from former regime figures trying to derail it.
Muslim Brotherhood leaders, meanwhile, made their highest profile appearances since the dispute began. The group's top leader Mohammed Badie and his powerful deputy Khairat el-Shater held press conferences Saturday alleging there was a conspiracy to topple Morsi but presenting little proof.
Badie said the opposition has accused his group of violence but is instead responsible for the attacks on Muslim Brotherhood offices. He also claimed that most of those killed in last week's violence at the Palace and other governorates were members of the Brotherhood.
"These are crimes, not opposition or disagreement in opinion," he said.
Meanwhile, with a dialogue largely boycotted by the main opposition players, members of a so-called Alliance of Islamists forces warned it will take all measures to protect "legitimacy" and the president, in comments signaling continued tension.
"We will not allow the revolution to be stolen again," el-Shater said. "Our main job is to support legitimacy and stop the plot to bring down the president."
Mostafa el-Naggar, a former lawmaker and protest leader during the uprising that led to Mubarak's ouster in February 2011, said the conspiracy alleged by the Brotherhood "doesn't exist." El-Naggar added that the Brotherhood and military statements suggested the crisis was far from over.
"The military is saying it is still here and will interfere when necessary. This is believed to be when there is widespread infighting," he said.
Meanwhile, he said Morsi and his group are threatening to widen the conflict by portraying the opposition as conspirators against Islam.
"As it stands, Egypt is captive to internal decisions of the Brotherhood," he said.