Egypt's Supreme Constitutional Court has said it had overruled President Mohamed Mursi's decision to recall the Islamist-led parliament that was dissolved by the country's generals last month.

The ruling heightened a confrontation between the newly elected head of state and an establishment that once served the man he replaced, ousted president Hosni Mubarak.

The court ruled on 14 June that laws under which parliament was elected were unconstitutional.

Egypt's then-ruling military council dissolved the assembly two days later. However Mursi issued a decree this week recalling parliament, which met today.

"The court ruled to halt the president's decision to recall the parliament," the head of the constitutional court, Judge Maher el-Beheiry, said in court.

The detailed ruling, published by state media, said the court's verdicts were final and could not be appealed and that both its rulings and their interpretations are binding on "all the state's authorities and everyone".

In addition, it said its 14 June decision had declared "the whole (lower house of) parliament void" because the election was based on unconstitutional laws. It added parliament was "non-existent by the power of the law since that date, without the need to take any other measure".

It described Mr Mursi's decision to recall the parliament as an "obstacle that stands against the execution of the previous verdict of the constitutional court".

The Brotherhood had said they accepted the 14 June ruling, but challenged the army's decision to dissolve parliament, saying it should be allowed to continue work until a new one is elected after a new constitution is written and passed by referendum.

The dispute is part of a broader power struggle, which could take years to play out.

It pits the Brotherhood, which was repressed by Mubarak and his predecessors, against the generals seeking to keep their privileges and status and a wider establishment still filled with Mubarak-era officials.

Shortly before parliament speaker Saad al-Katatni opened the session, the United States urged all sides to engage in talks to safeguard the political transition in Egypt.

''I invited you to convene in accordance with the decree issued by the president," said Mr Katatni, who like Mr Mursi hails from the Brotherhood.

"I would like to confirm that the presidential decree does not violate the court order."

Yesterday, the army defended its action to dissolve parliament and said it was confident "all state institutions" would respect the constitution and the law.

Nevertheless, the army did not take any steps to prevent lawmakers from entering parliament.

Speaking in Hanoi, US Secretary of State Hillary Clinton called for talks to resolve any differences.

"We strongly urge dialogue and concerted effort on the part of all to try to deal with the problems that are understandable but have to be resolved in order to avoid any kind of difficulties that could derail the transition that is going on," she told a news conference.

As well as riling the army and judiciary, Mr Mursi's recall of parliament raises tensions between the Brotherhood and liberal and other groups concerned at what they see as an Islamist power grab.

The Brotherhood says it is seeking a way to comply with the court's ruling that would not require parliament to be dissolved.

After his short address to parliament, Mr Katatni said lawmakers would discuss how to implement the court's ruling.

"We always respect the judiciary and we confirm that what we are discussing today is the mechanism to implement these court rulings," he said.