Morsi's decree appeared to take the generals off guard. In the first sign of an imminent crisis, the Supreme Council of the Armed Forces held an "emergency meeting" shortly after it was announced. The official Middle East News Agency said the generals met to "review and discuss the consequences" of the decision.
The Supreme Constitutional Court, the tribunal that dissolved the legislature last month, was to meet Monday to discuss the issue.
Morsi, a member of the powerful Muslim Brotherhood, which has long been at odds with the military, also called for new parliamentary elections within 60 days of the adoption of a new constitution, which is not expected before late this year.
The dual moves were seen as a significant step by a leader whose authority was called into doubt by the generals' power grab in the days before and after the June 16-17 presidential runoff.
Last month, the then-ruling military generals dissolved the legislature after the Supreme Constitutional Court, the country's highest tribunal, ruled that a third of its members had been elected illegally - a move that angered the Brotherhood and poisoned the atmosphere ahead of the military's handover of power to Morsi on June 30.
The dissolution of parliament came as a severe blow to the Brotherhood, which held nearly half its seats and has dreamt of political power for most of its 84 years. Long banned, the group's leaders and hundreds of its supporters were jailed in the 1950s and 1960s, and subjected to repeated crackdowns throughout most of Mubarak's 29 years in power.
While Morsi made no mention of the high court ruling, taking aim only at the generals in revoking the military decree disbanding the legislature, some questioned whether he had the legal authority to overrule the high court.
The country's leading pro-reform campaigner, Nobel Peace Prize Laureate Mohamed ElBaradei, himself a longtime critic of the military, warned Morsi's action threatened to undermine the country's judicial authority.
The president's decree, he wrote on his Twitter account, "ushered Egypt into a constitutional coma and a conflict between the state's branches."
With the constitution in effect under Mubarak suspended and no new one in place because of disputes over who should write it, Morsi's decree drew attention to the disarray over the roles and powers of Egypt's governing institutions.
The military announced a "constitutional declaration" last month giving itself legislative powers in the absence of parliament and stripping Morsi of much of his presidential authority. The generals also took control over the process of drafting a new constitution, as well as control over the national budget.