Interim Prime Minister Hazem Beblawi has put forward a proposal to legally dissolve the Muslim Brotherhood.
The country's cabinet is set to discuss the crisis that erupted after military ousted former president Mohammed Morsi on July 3, sparking deadly clashes that left hundreds dead.
"There will be no reconciliation with those whose hands have been stained with blood and who turned weapons against the state and its institutions," Beblawi told reporters.
His proposal to dissolve the Brotherhood raises the stakes in the struggle for the control of Egypt, BBC reported.
If it is acted upon, it could force the group underground and allow its sources of funding to be targeted.
Despite being closely allied to deposed President Morsi's government, the Brotherhood has always been a banned organisation -- dissolved in 1954 by Egypt's military rulers.
But it recently registered itself as a non-governmental organisation.
Meanwhile, the Muslim Brotherhood announced more protests on Sunday.
A statement by the Anti-Coup Alliance said several marches would take place in the Egyptian capital this afternoon, continuing the daily campaign of protests in defiance of a security crackdown.
On Saturday, Egypt's security forces cleared the al-Fath mosque in Cairo after a long stand-off with Muslim Brotherhood supporters barricaded inside.
The interior ministry said 1,004 Muslim Brotherhood members had been detained in raids across the country, with bombs, weapons and ammunition seized.
The Brotherhood was quoted as saying sons and daughters of leadership figures had been targeted in an attempt to gain leverage over the organisation.
Among those killed on Friday was a son of the Brotherhood's spiritual leader, Mohamed Badie.
One figure detained was Mohammed al-Zawahiri -- brother of Al Qaeda leader Ayman al-Zawahiri -- whom officials said had planned to support the Brotherhood supporters previously holed up in the al-Fath mosque.
Since Wednesday, over 800 people have died in clashes that erupted after security forces stormed two camps set up by Morsi loyalists in Cairo to protest his ouster.
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