President Ali Abdullah Saleh's allegations, unprecedented in their harshness, signaled a growing rift with the United States that could hurt a joint campaign against the al-Qaida terror network in Yemen.
Saleh's comments today, including charges that the US Embassy in the capital of Sanaa is giving instructions to the protesters, appeared to be part of an attempt to silence the calls for his ouster.
Saleh has come under mounting pressure to step down since anti-government protests erupted earlier this month, and opposition parties joined for the first time today.
Organisers said that they brought hundreds of thousands into the streets in cities across Yemen, for the largest turnout yet. In the capital of Sanaa, tens of thousands rallied near the university, chanting the people want the downfall of the regime.
Sheik Abdul-Majid al-Zindani, considered by the US to be linked to the al-Qaida terror network, led noon prayers and told the demonstrators their demands were legitimate.
Yaseen Said Nouman, leader of the Socialist Party, which ruled south Yemen before merging with the north in 1990, also joined the rally. The Socialist party is the biggest opposition party in the south.
About 6,000 government supporters held a counter march in Sanaa, raising pictures of Saleh and shouting "No to anarchy, no to destruction." Yemen is a key battleground against al-Qaida, and Saleh has been a weak, but important partner for Washington.
His government, which receives millions of dollars in US military aid, has allowed American drone strikes on al-Qaida targets.
However, in a speech to about 500 students and academics at Sanaa University, Saleh appeared to be turning on his ally, claiming the US, along with Israel, is behind the protest movement.
"I am going to reveal a secret," he said. "There is an operations room in Tel Aviv with the aim of destabilising the Arab world. The operations room is in Tel Aviv and run by the White House," he said.
He said opposition figures meet regularly with the US ambassador in Sanaa to coordinate efforts. "Regrettably those (opposition figures) are sitting day and night with the American ambassador where they hand him reports and he gives them instructions," Saleh alleged.