Judges across the country had vowed to strike, while hundreds of protesters camping out in Cairo's Tahrir Square vow not to leave until the president rescinds decrees issued last week that give him sweeping new powers.
After reports of more violence between protesters and police overnight, clouds of tear gas hung over streets leading to the square, where clashes have flared for several days.
Morsi defended his decrees, saying they will only be in place until a new constitution is ratified and a new parliament elected.
"We have only one demand of Morsi," said protester Ehab Abdel Salam, "that he cancels his constitution declaration so the country will stabilize."
On Tuesday, more than 200,000 protesters packed Tahrir Square in the biggest challenge yet to Morsi.
The same chants used against ousted president Hosni Mubarak during the Arab Spring revolts were tuned against Morsi as protesters shouted "erhal, erhal" — Arabic for "leave, leave."
According to Reuters, Egypt's Cassation and Appeals courts plan to suspend their work until the country's constitutional court rules on the president's decrees.
Morsi says he needs the extended powers to keep democratic reforms on track amid remnants of the former authoritarian regime, but they have fuelled a broader outpouring of anger against the president and his supporters from the Muslim Brotherhood.
Opposition leader Mohamed ElBaradei told Germany's Der Spiegel in an interview published Monday that there is growing concern in Egypt that they will draft a new constitution with "islamist undertones that marginalizes the rights of women and religious minorities."