The Obama administration is in talks with top Egyptian officials about the possible immediate resignation of President Hosni Mubarak and the formation of an interim government that could prepare the country for free and fair elections later this year, U.S. officials said late Thursday. 

Creation of a military-backed caretaker government in Egypt is one of several ideas being discussed as anti-Mubarak protests escalate in the streets of Cairo and other Egyptian cities, the officials said. Those protests are expected to grow in size and intensity on Friday and the administration fears they may erupt into more widespread violence unless the government takes tangible steps to address the protesters' main demand that Mubarak leave office.

Chaos already prevails in the streets of Cairo, where pro- and anti-government groups clashed for a second day Thursday in a central square, and further escalation is expected Friday.

Mubarak told ABC he is troubled by deadly violence in Cairo's Tahrir Square and that the government is not responsible for it. In the interview at the presidential palace, Mubarak blamed the outlawed Muslim Brotherhood for the violence.

Among the options being discussed is a proposal for Mubarak to resign immediately -- which the embattled president has refused to do -- and for him to cede power to a transitional government run by Suleiman.

"It could well be that this is in anticipation of events tomorrow," State Department spokesman P.J. Crowley said. "We are bracing for a significant increase in the number of demonstrators on the streets and the real prospect of a confrontation."