The Interior Ministry warned police were authorized to use lethal force to protect themselves and promised to punish "terrorist actions and sabotage," The New York Times reported.
The warning came after the offices of the governor of Giza were set afire. Hundreds of protesters marched in Alexandria, confronting police. The main highway circling Cairo also was blocked, the Times said.
Obama chastised the government for the crackdown and extended condolences to the victims' families.
"The United States strongly condemns the steps that have been taken by Egypt's interim government and security forces," Obama said.
The president said traditional cooperation with Egypt "cannot continue as usual" and canceled next month's joint military exercise.
The U.S. State Department closed its embassy in Cairo Thursday and advised U.S. citizens to avoid areas "where large gatherings may occur."
The State Department said routine consular services would be suspended for the day.
"As a matter of general practice, U.S. citizens should avoid areas where large gatherings may occur," the department said. "Even demonstrations or events intended to be peaceful can turn confrontational and possibly escalate into violence. U.S. citizens in Egypt are urged to monitor local news reports and to plan their activities accordingly."
Mohamad Fath Allah, the Health Ministry spokesman, said 202 people died near Eman mosque as security forces cleared sit-ins at the main protest camp at Rabaa al-Adawiya Square Wednesday. Eighty-seven others died in Nahda Square and 29 in Helwan, in southern Cairo. Some 207 deaths occurred in the provinces, The New York Times reported.
Wednesday was Egypt's single bloodiest day since the 2011 uprising that toppled autocratic President Hosni Mubarak. At least 3,700 people were injured in the clashes.
Egypt's security forces acted with "self-restraint" in clearing sit-ins by Morsi backers, the military-led interim government said.
At the same time, Islamist protesters removed from the two sit-ins Wednesday established new sit-in sites overnight -- one outside a landmark Cairo mosque and others in cities around the country, the Times reported. The sit-ins defied a new 7 p.m. to 6 a.m. curfew and the interior minister's vows to break up any such assemblies.
"Our forces have exercised self-restraint and professionalism in their actions," the government said in a statement read on state television late Wednesday. "This is reflected in the low number of injuries."
Hundreds of Morsi-allied Muslim Brotherhood members were arrested nationwide Wednesday, the government said.
Mohamed ElBaradei, the Nobel Peace Prize winner and vice president, resigned Wednesday in protest.
The Obama administration strongly condemned the violence and said it would hold the interim government accountable for its promises of a speedy transition to a democratically elected civilian administration.
Ibrahim, one of the few ministers who kept his Cabinet post after Morsi was ousted July 3, said in a televised address his security forces "insisted on maintaining the highest degrees of self-restraint."
Interim Prime Minister Hazem al-Beblawi, a Western-trained economist who had been considered a liberal, echoed Ibrahim's remarks, saying in a televised statement security forces acted with the utmost "self-restraint" after six weeks of the unauthorized sit-ins.
He cited the Islamist protesters' alleged stockpiling of weapons and ammunition in justifying the use of force, which he said was intended to protect the rights of other citizens.
"Things were spiraling out of control, and we decided to take a firm stance," he said.