Emergency law can be used to prevent the holding of political protests
Egyptian MPs have approved a government request to extend emergency law, although President Hosni Mubarak had promised it would be lifted this year.
Officials say anti-terror legislation which had been due to replace the controversial emergency powers - in force since 1981 - is not ready.
The emergency law allows detention without charge for long periods and searches without warrants.
It has been strongly criticised by the opposition and human rights groups.
They are also critical of plans for the new anti-terrorism law, which they say will put many of the same powers on the permanent statute.
The BBC's Magdi Abdelhadi in Cairo says the two-year renewal will come as no surprise to government critics, who say in reality it is used not just to fight terrorism but also to lock up its political enemies.
They fear that in the absence of strong united opposition and international pressure on Mr Mubarak, it is unlikely he will abandon old ways of running a country, our correspondent adds.
Supporters of the government say the state of emergency has brought stability to Egypt, in a region seething with turmoil.
The last two-year extension of the state of emergency would have expired on 1 June.
Parliament is dominated by the ruling National Democratic Party and approval of the NDP government's request for an extension was not in doubt.
President Mubarak promised to replace emergency rule during his re-election campaign in 2005.
Emergency legislation has been used to convict members of Egypt's strongest opposition group, the Muslim Brotherhood, in military courts on unpublished charges.
"The state of emergency has for decades been one of the main causes of human rights violations in Egypt," said Egyptian Organisation for Human Rights head Hafez Abu Saada in comments quoted by AFP news agency.
"The state of emergency is by definition put in place when the country is going though a period of danger such as a war or a natural disaster, which is not the case," he said.