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Mr Maher has been slow to carry out social and land reforms demanded by the army and has given way to General Muhammad Neguib.
This evening the general formed a new civilian government with himself as prime minister and commander-in-chief.
The army then arrested several leading politicians in order to snuff out any resistance to land and social reforms.
Free Officers demand reform
On 23 July General Neguib, Colonel Abdel Nasser and Colonel Anwar Sadat led a coup of the so-called Free Officers that brought to an end to the rule of the former King Farouk and his son Fu'ad II.
The Army replaced Prime Minister Hilaly Pasha with Aly Maher. Although Mr Maher was a member of the old regime, he was interested in land redistribution and improved rights for workers.
But it seems he failed to implement the reforms quickly enough to satisfy the leaders of the "Egyptian revolution" or to root out those involved in corruption.
The army is now carrying out its own purge of political parties, especially the influential nationalist Wafd party.
'Force against corruption'
In a statement broadcast on Cairo Radio's English and foreign services, the army set out reasons for this latest move.
"The Army revolt was not merely a movement against the ex-King, but it has also been, still is, and always will be a force directed against corruption in all its forms."
The army said it asked for a purge of those suspected of "injustices".
"Such parties and organisations were reluctant to carry out our requests and resorted to evasion of the issues. Consequently we had to arrest ... certain individuals ... so that every individual could give his evidence in an atmosphere free of fear and in tranquillity."
Meanwhile the king and his son, along with several leading politicians, are being held at the Military Academy in Cairo.
While officers continue to arrest leading figures in Cairo, troops are making their presence felt on the main streets of Alexandria though the atmosphere is described as calm.
The nationalist Wafd party was formed in 1924, two years after Egypt gained its independence from Britain. It dominated Egyptian politics until the 1952 coup when it was dissolved but re-emerged in opposition in 1984.
General Neguib ended the monarchical system in Egypt and became president of the newly formed republic.
In 1954 he was deposed and succeeded by Gamal Abdel Nasser, a driving force behind Neguib's coup, who infuriated Britain, France and Israel by nationalising the Suez canal in 1956.
After his death in 1970, he was succeeded by fellow coup leader Anwar Sadat as president.
In September 2005 Egypt is holding its first contested presidential election. The incumbent, Hosni Mubarak, who has been in power since the assassination of Sadat in 1981, is widely expected to win.
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