Mr Gyurcsany sparked an outcry across Hungary which resulted in rioting, after it was revealed that he lied about the dire state of the economy in order to win re-election in April.
Over the past four days, the crowds in front of parliament have been swelling to more than 10,000 by the evening.
It’s a relatively small number in Budapest, a city of two million, but significant enough because of the charged political atmosphere that has sparked the upheaval.
Clashes between police and violent protestors over the past three nights have left more than 250 injured and about 200 detained.
Because of the tense security situation, the main opposition Fidesz party of conservative leader Viktor Orban, has cancelled a rally planned for Saturday where up to 200,000 protesters were expected to attend.
The cancellation came after police expressed concerns about their ability to control a big crowd after three nights of clashes.
Mr Gyurcsany welcomed the decision by Fidesz to change course and call off their demonstration.
"I am very happy. They made the only correct decision," Mr Gyurcsany said.
But Fidesz stressed that the protest had only been postponed and that it would now take place after the municipal elections on October 1.
The rally had been planned as a finale to the local election campaign before the current Mr Gyurcsany scandal erupted.
There were also reports of a number of bomb hoaxes, including at three television stations, a railway station, and the education ministry.
In an attempt to address the unrest, Mr Gyurcsany called for multi-party talks on Thursday but Fidesz refused to attend.
Mr Gyurcsany's popularity slumped even before the protests erupted, after he introduced harsh economic reforms that include tax increases in order to rein in a skyrocketing deficit, the highest in the European Union at more than 10 percent of gross domestic product.
Mr Gyurcsany had promised tax cuts and higher social spending during the election campaign.