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Protesters demand major reform including the election of the prime minister and the creation of a "real" constitutional monarchy.
Many protesters, mainly Shias, have also called for an end to the Sunni Al-Khalifa dynasty which has ruled the country for almost two centuries.
While Shias represent nearly 75 percent of the Bahraini population, the country has been ruled by a Sunni royal family since the 18th Century.
Protesters have vowed to remain camped out in Pearl Square and have refused to enter talks with the Crown Prince until their demands are met.
In an attempt to contain massive pro-democracy demonstrations, Bahraini authorities on Wednesday released 23 political prisoners after a pardon by King Hamad. Authorities have also announced a minor cabinet reshuffle.
The Friday's mass rally came after Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff, paid a short visit to Bahrain, reaffirming Washington's commitment to embattled King Hamad.
Bahrain is a key US ally in the Middle East and home to Washington's Fifth Fleet.
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