Halting the referendum is a key demand of the opposition and some have already dismissed Mr Morsi's latest move.
The president's critics accuse him of acting like a dictator, but he says he is safeguarding the revolution.
His supporters are due to gather in the capital Cairo later on Sunday.
Strikes
The opposition National Salvation Front is meeting on Sunday before issuing a formal response.
Mahmoud el-Alayli, deputy secretary general for the Free Egyptians Party - a member of the NSF - told the BBC Mr Morsi needed to postpone the 15 December referendum on "this constitution which was prepared by an assembly whose legitimacy was and still is very questionable".
The opposition appears to have won half the battle. The president did not budge on the sticking point of the referendum on the controversial draft constitution.
Vice-President Mahmoud Mekki said if the draft constitution was rejected by a popular vote then elections would be held for a new constituent assembly.
The reaction of the main opposition National Salvation Front will now be key to how events shape politically.
Since the announcement of the decree on Mr Morsi's powers, Egypt has been deeply polarised. It remains to be seen whether this annulment will defuse tension on Egypt's volatile streets.
If the president refused, the opposition would call strikes across the country, Mr Alayli told the Newshour programme.
"We are going to be on the streets in all the cities everywhere," he said.
However, Mohamed Soudan, foreign relations secretary of the Muslim Brotherhood's Freedom and Justice Party, said President Morsi was constitutionally bound to go ahead with the vote.
The draft constitution was endorsed by a constitutional assembly dominated by Mr Morsi's Islamist allies.
The army has built a wall of concrete blocks to seal off and protect the presidential palace, which has been the focus of opposition demonstrations.
The situation is as tense as ever, says the BBC's Jon Leyne in Cairo.
Mr Morsi's decree of 22 November stripped the judiciary of any right to challenge his decisions and triggered violent protests on the streets of Cairo.
Although the decree has been annulled, some decisions taken under it still stand.
The general prosecutor, who was dismissed, will not be reinstated, and the retrial of the former regime officials will go ahead
