CAIRO – President Mohammed Morsi on Sunday ordered Egypt’s Islamist-dominated parliament back in session, boldly defying the military leaders who had disbanded the body just a month ago. The generals went into an emergency session within hours of the decree.

According to Egypt’s official news agency, Morsi reversed the June 15 annulment of parliament by the military council, which had been ruling the country until he took office late last month, and ordered lawmakers back to work. A majority of the legislators are members of the Muslim Brotherhood’s Freedom and Justice Party — to which Morsi belongs — or other Islamist groups.

Morsi also called for parliamentary elections to be held within 60 days of the approval of a new constitution, which is expected later this year.

The decree is considered pivotal by many observers, who have been waiting to see how the fledgling government would respond to the military council’s grab of executive powers on the eve of the presidential election.

Just a week after being sworn in, Morsi answered with a direct challenge to the generals, signaling that the unfolding power struggle between the armed forces and the once-banned Muslim Brotherhood would not be a one-sided fight.

“No one is going to dismiss Morsi as a figurehead now,” said Shadi Hamid, director of research at the Brookings Doha Center in Qatar. “They had to do something to fight back and gain the momentum. Assuming it wasn’t pre-negotiated (with the military), and it doesn’t look like it was, it’s certainly an aggressive first move.”

The decree further confuses Egypt’s tumultuous transition from dictatorship to democracy just one week before a planned visit to Cairo by Secretary of State Hillary Rodham Clinton. Morsi’s gambit could mark the start of a prolonged game of brinksmanship between an entrenched military and a government with popular support.

Mohamed Saad Katatny, head of the dissolved parliament, said in a statement that the legislative body would try to hold a session as soon as possible.

Few can predict where the standoff will head next. Given the profound disarray of Egypt’s governing institutions, few can even say who had the authority to arbitrate.

The military dissolved parliament after a June 14 ruling by the Supreme Constitutional Court that one-third of the members of the lower house had been elected unlawfully.

The ruling was a significant setback for Morsi’s Freedom and Justice Party, which had just under half the seats in parliament. The judges are appointees of the Hosni Mubarak era and are widely assumed to have acted with the blessing, if not the prodding, of the generals.

The next day, in addition to dissolving the parliament, the military council took sole control of its own budget and a range of national security prerogatives.

Morsi’s decree coincided with a visit to Cairo by Deputy Secretary of Defense William Burns, who said Washington would help jump-start Egypt’s ailing economy.

“Egyptians know far better than we do that their aspirations are not yet fully realized,” Burns told reporters after meeting with Morsi. “But they can count on America’s partnership.”

According to Hamid, Morsi may have created an opening for a solution that would serve both parties. Reseating the old parliament would give Morsi an invaluable legislative boost as he struggles to form his government.

At the same time, ensuring relatively quick elections would give the military the new parliament it craves for the longer term.

“I think it was a good first move. At least something is going to happen now,” Hamid said.