Sudan's ruling military council said on Tuesday it would cancel all agreements with the main opposition coalition and called for elections within nine months following Monday's violent events.
Sudanese security forces reportedly stormed the protest camp in the early hours of Monday morning, with at least 35 people reported to have been killed, according to opposition-linked medics.
Sudan's public prosecutor set up a committee to investigate violence at the main protest site outside the Defense Ministry headquarters in Khartoum, according to state news agency SUNA.
The decision by the Transitional Military Council (TMC) will likely fuel anger among protesters who have demanded preparations for elections during a longer transitional period led by a civilian administration.
The TMC assumed power in April after the military ousted President Omar al-Bashir after three decades in power.
The military council is allegedly not opposed to protesters forming a government if it maintains overall authority during the interim period.
But demonstrators want civilians to rule during the transitional period and lead the African country towards democracy.
The TMC has vowed in the past to not use violence against protesters camping outside the Defence Ministry.
Arab television stations showed protesters running away from the camp as black smoke rose from tents allegedly set alight by the security forces.
The main protest organisers, the Sudanese Professionals Association (SPA), accused the TMC of carrying out "a massacre" as it stormed the camp, a charge denied by the council.
TMC spokesman Lieutenant General Shams El Din Kabbashi said security forces were chasing "unruly elements" who were hiding in the protest site and caused chaos.
Britain's ambassador to Sudan said he was "extremely concerned" about the gunfire heard from his residence.
The US embassy in Sudan said the attacks were "wrong and must stop".
What started the unrest?
Anger over the rising price of bread started the protests back in December that culminated with the army removing Bashir for good.
But when talks between a coalition of protesters and opposition parties were halted over differences over who will lead the transition government, protests increased.
TMC leader Lieutenant General Abdel Fattah al-Burhan blamed the opposition coalition for delaying talks for a final agreement.
He also said that the TMC would be cancelling all agreements with protest groups and called for elections within nine months, which he said would be organised under regional and international supervision.
He added that an interim government would be formed immediately until the elections are held.
Protest organisers have not yet replied to Burhan's decision.