U.S. President Barack Obama condemned the bloody crackdown in Egypt on Thursday, announcing that joint military exercises next month were canceled and that normal U.S. cooperation could not continue with the country while civilians were being killed.

"The United States strongly condemns the steps that have been taken by Egypt's interim government and security forces," Obama said on the Massachusetts island of Martha's Vineyard where he is on vacation.

"We deplore violence against civilians. We support universal rights essential to human dignity, including the right to peaceful protest," he said. At least 638 people have been killed and thousands wounded.

Obama said the United States had informed Egyptian authorities it had canceled a joint military drill named "Bright Star" that had been scheduled for September.

The drill, dating back to 1981, is seen as a cornerstone of U.S.-Egyptian military relations and began after the Camp David Peace Accords between Egypt and Israel.

"While we want to sustain our relationship with Egypt, our traditional cooperation cannot continue as usual when civilians are being killed in the streets and rights are being rolled back," Obama said, speaking at a press conference from his rental vacation home on the Massachusetts island of Martha's Vineyard.

"The Egyptian people deserve better than what we've seen over the last several days. And to the Egyptian people, let me say: the cycle of violence and escalation needs to stop."

The joint military exercise, held every two years, was canceled in 2011 because of the political turmoil in Egypt following the ouster of longtime autocrat and U.S. ally Hosni
Mubarak.

On Thursday hundreds of supporters of Egypt's Muslim Brotherhood stormed a government building in Cairo and set it ablaze, as fury over a security crackdown on the Islamist movement that killed hundreds of people spilled on to the streets.

Obama said the state of emergency should be lifted in Egypt and a process of national reconciliation started. He noted that the United States did not take sides with any political party in the conflict and called for patience, saying that democratic transitions can take generations.

MB vows to topple coup

Earlier Thursday, Egypt's Muslim Brotherhood returned to the streets after vowing to bring down the "military coup" with a "peaceful" struggle, despite the heavy loss of life when government forces broke up its protest camps Wednesday.

The death toll from the previous day's violence continued to climb Thursday. An Egyptian Health Ministry spokesman said that number had reached 525 by the afternoon. Khaled el-Khateeb told The Associated Press that the number of injured in had also risen, and now stood at 3,717. He said 202 of the dead were killed in the larger of the two camps, in Cairo's eastern Nasr City district.

On Thursday afternoon, hundreds of Muslim Brotherhood supporters stormed a government building in Cairo and set a fire at its entrance, state TV and witnesses said. Meanwhile, hundreds marched in Egypt's second biggest city of Alexandria to protest the violence. "We will come back again for the sake of our martyrs," the marchers chanted. 

Also Thursday, Egypt's state news agency announced that judicial authorities have extended deposed President Mohammed Morsi's detention period for 30 days. Morsi, overthrown by the army on July 3, is being held at an undisclosed location on allegations of murder and spying.

The crackdown on Wednesday defied Western appeals for restraint and a peaceful, negotiated settlement to Egypt's political crisis following the military's removal of Morsi last month, prompting international statements of dismay and condemnation.