Sudan's military leaders say they are scrapping all existing agreements with the main opposition coalition and will hold elections within nine months.
The announcement came as the military faced mounting international condemnation for their violent attack on protesters in the capital, Khartoum, which reportedly left at least 30 dead.
The US said it was a "brutal attack".
The crackdown came after the military and protesters agreed a three-year transition period to civilian rule.
Demonstrators argue that former regime of President Omar al-Bashir, who was overthrown by the military in April after months of protests, is so deeply entrenched that a transition of at least three years is needed to dismantle his political network and allow fair elections.
The Transitional Military Council (TMC), which has governed since the coup, and negotiators for the pro-democracy movement had also agreed on the structure of a new administration.
But the TMC's head, General Abdel Fattah al-Burhan, said in a statement broadcast on state television that they had decided to "stop negotiating with the Alliance for Freedom and Change and cancel what had been agreed on".
An election in nine months' time would take place under "regional and international supervision", he added.
Speaking on BBC's Newsday, analyst and former British ambassador to Sudan Rosalind Marsden said the snap election would "simply pave the way for much of the old regime to come back into power".
"There's a real risk of violence continuing," she said.
In the wake of killings, the leaders of the pro-democracy movement said they were cutting all contact with the TMC and called for "total civil disobedience" and a general strike.
The security services moved on the main protest site early on Monday, activists said, and heavy gunfire could be heard in video footage.
The demonstrators have been occupying the square in front of the military headquarters since 6 April, five days before Mr Bashir was overthrown.
In a statement read on national television, the military council expressed its "sorrow for the way events escalated", saying the operation had targeted "trouble makers and petty criminals" .
"During the execution of the campaign, large numbers of these groups took shelter in the sit-in square, which led some of the square's officers, based on their judgment, to follow and chase them, which led to losses and injuries."
The military, the statement added, was dedicated to protecting civilians.
Protesters set ablaze tyres to try to stop Sudan's security forces
Earlier, activists said the security forces had surrounded one hospital in Khartoum and had opened fire at another.
The Central Committee of Sudanese Doctors, which is close to the protesters, said 30 people - including an eight-year-old child - had been killed, and that the toll was likely to rise as not all casualties had been accounted for.
Hundreds of people had been injured, it added.
Some residents blame the notorious paramilitary unit known as the Rapid Support Forces, set up to help keep Mr Bashir in power and with roots in the Darfur conflict in western Sudan, which began in 2003.
Then known as the "Janjaweed", this militia carried out frequent massacres.
The Sudanese Professionals Association (SPA), which is spearheading nationwide protests, called for a campaign of "sweeping civil disobedience to topple the treacherous and killer military council".
The UN chief urged the Sudanese authorities to facilitate an independent investigation and to hold those responsible accountable.
UN Secretary General António Guterres called for an independent investigation saying he was "alarmed" by reports that officers had opened fire in a hospital.
"He condemns the use of force to disperse the protesters at the sit-in site and he is alarmed by reports that security forces have opened fire inside medical facilities," a statement for Mr Guterres said.
In other reaction:
Sudan's state news agency said the public prosecutor had set up a committee to investigate the violence.
Analysis by Tomi Oladipo, BBC's Africa security correspondent
It is back to square one for Sudan's political process. The hardening stances that stalled the talks between the protest groups and the TMC have been further cemented on both sides.
Expect more resolute protests and a possibly even more ruthless crackdown from the men in uniform. It is the latter who are governing right now. What matters is which faction of the security forces has the upper hand in the TMC.
The hardliners, particularly the Rapid Support Forces - led by the deputy head of the regime, Mohamed "Hemeti" Hamdan Dagalo - appear to be leading the way and could display more ruthlessness than has been seen so far.
There has been a total lockdown in Khartoum, indicating something has shifted within the regime. "People power" is taking a big hit, but protesters could be willing to take greater risks to force the military's hand, if possible.