Shiite insurgents reached an agreement late Wednesday with Yemen’s embattled president to end a siege of his residence and call off a rebel offensive that the government and regional Arab states have decried as a coup attempt.

President Abed Rabbo Mansour Hadi agreed to the deal after Houthi rebels seized his presidential palace and surrounded his residence about three miles away on Tuesday, according to aides.

The accord, announced by the state-run SABA news agency, includes deep concessions to the Houthi rebels. It was confirmed by Information Minister Nadia Sakkaf in a Twitter message.

The Houthi offensive badly undermined the authority of a leader who is considered an important ally of Washington in the fight against Yemen’s powerful al-Qaeda affiliate.

There was no immediate response to the reported deal in Washington. Earlier Wednesday, State Department spokeswoman Jen Psaki told reporters that Hadi remains the head of “the legitimate Yemeni government” and that “we remain in touch with him.” She said U.S. counter­terrorism cooperation with his government is continuing “at this point in time.”

MAP: Possible coup attempt in Yemen

White House spokesman Josh Earnest said the Obama administration was monitoring the situation “minute by minute.”

“We’ll take whatever steps are necessary to protect American citizens up to and including evacuating the embassy if we determine that’s necessary,” he told reporters.

The fighting has been the most intense since the Houthis stormed into the capital in September and began taking control of Yemen’s institutions, as well as at least nine provincial capitals. The latest offensive raised fears that Yemen could plunge into a power vacuum, if not a full-scale civil war, that could be exploited by militants linked to al-Qaeda. The terrorist network’s Yemeni affiliate, known as al-Qaeda in the Arabian Peninsula (AQAP), claimed responsibility for a Jan. 7 attack in Paris on the satirical newspaper Charlie Hebdo that triggered three days of violence that left 20 people dead, including the three perpetrators.

A Yemeni presidential aide, who spoke on the condition of anonymity because he feared for his safety, said Hadi has been stripped of significant authority by the deal with the Houthis. In a televised speech Tuesday evening, the Houthi leader, Abdulmalik al-Houthi, threatened Hadi with more attacks if he did not give in. The rebels’ demands included a bigger role in drafting a new constitution acceptable to the Houthis, who have waged an intermittent war against the government since 2004. The majority of Yemen’s population is Sunni Muslim.

Under the deal, according to the SABA report, the president agreed to increase the Houthis’ representation in parliament and heed their constitutional demands. Yemen would also become a federal state, although it was not immediately clear whether that would mean retaining a proposal in an existing draft constitution to create six federalized provinces. The Houthis have rejected that idea.

The document also calls for more participation in the government by people in southern Yemen, where a separatist movement has gained momentum in recent years.

The Houthi assault alarmed Yemen’s neighbors, especially Sunni Arab states such as Saudi Arabia, which see the Shiite insurgents as proxies for Iran. Earlier Wednesday, foreign ministers from the six-member Gulf Cooperation Council, or GCC, harshly condemned the assault, calling it a “coup d’etat.”

Yemeni President Abed Rabbo Mansour Hadi expressed readiness to accept Houthi demands for power-sharing after two days of battle. (Reuters)

The council, which consists of Yemen’s Arab neighbors in the Persian Gulf — Saudi Arabia, the United Arab Emirates, Bahrain, Kuwait, Qatar and Oman — demanded that the government be allowed to reassert control.

Hadi, who came to power in 2012 after a popular uprising led to the ouster of President Ali Abdullah Saleh, fostered unprecedented cooperation between Yemeni forces and the U.S. military in using drone strikes to target al-Qaeda militants.

However, civilian casualties as a result of the attacks angered many Yemenis.

Ali al-Bukhayti, an official in the Houthis’ political affairs office, said by telephone that the insurgent group has “no communication” with the United States. “We are not convinced of the usefulness of the so-called U.S. war on al-Qaeda,” he said. He called the drone attacks “a flagrant violation of national sovereignty.” The Houthis themselves have battled al-Qaeda-linked militants before.

The Houthis have long demanded more political rights and an end to what they charge is official discrimination. They have portrayed their assault on the capital as part of a campaign to end corruption and initiate reforms that many Yemenis see as having stalled under Hadi’s leadership.

The Houthis, who follow the Zaydi sect of Shiite Islam, reject accusations that they are acting as a proxy for Iran, which is led by Shiite clerics. Zaydis form about a third or more of Yemen’s population.

Naylor reported from Beirut. Brian Murphy and William Branigin in Washington contributed to this report.