"Syria is apparently experiencing a rare moment of calm on the ground," Annan said in a statement as he briefed a United Nations Security Council which has been divided along Cold War lines by the 13-month crisis at the heart of the Middle East.
Western leaders, who share Syrian dissidents' doubts about Assad's willingness to engage in a democratic process that would end his family's four decades of absolute power, stepped up calls on Russia and China, veto-wielding bulwarks for Syria in the Security Council, to extend their support for Annan's six-point peace plan by joining a united push for negotiations.
Echoing reports from weary opposition activists in some of the most battered districts of Homs, Hama and Idlib, Annan said: "The cessation of hostilities appears to be holding ... This is bringing much-needed relief and hope to the Syrian people who have suffered so much for so long in this brutal conflict."
But he urged the Security Council to demand a full military withdrawal to bolster the extremely fragile truce.
President Bashar al-Assad's tanks and infantry are still deployed in cities in defiance of Annan's plan, state media are accusing "terrorists" of attacks on troops that might justify retaliation, and rebels are urging demonstrators to test the ceasefire by massing on the streets on Friday,
Diplomats at the United Nations in New York, who heard Annan brief the 15-nation world policy body by videolink from Geneva, told Reuters the Council should swiftly mandate the despatch of some 200 unarmed peace observers to Syria to monitor the truce.
A report on state media that a "terrorist" bomb blasted an army bus and killed a senior officer in Aleppo after the truce began raised a possibility troops will keep a pledge to hit back. State media also reported a bomb wounding officers near Idlib and a ruling party member shot dead in Deraa in the south.
The Syrian government bars access to most independent media.
The exile opposition called the ceasefire "only partially observed" due to the army's failure to leave the streets and its leader urged a renewal on Friday of peaceful protests, which have been subdued of late by fear. But he warned those who might take part that they could expect government forces to open fire.
The Interior Ministry urged rebels to surrender, promising to free those who had not killed, and broadcast an appeal to the thousands who fled battered cities like Homs and Hama to return from the havens they found in Turkey, Lebanon and within Syria.
But streets in troubled towns remained nervously empty. An exile opposition spokeswoman said three people had been killed during the morning by security forces, and dozens more arrested.
Speaking after the 6 a.m. (0300 GMT) UN deadline passed, Abu Rami, an activist in Homs said: "It was a bloody night. There was heavy shelling on the city ... But now it is calm, and there is no shooting." Assaults on restive neighbourhoods had become more intense after Assad accepted Annan's timetable.
Opposition stronghold districts of Homs were still but deserted. "Snipers, tanks and soldiers are still there. They did not go anywhere. People are wary and they believe that this ceasefire is only temporary. Nobody is leaving their homes," said Yazan, an activist in Homs.
Shops gaped open. The windows of apartment blocks were blank and glassless, curtains drifting in the breeze. Videos shot from hiding on the upper levels of shattered buildings or through the holes punched in concrete walls by tank rounds caught Syrian soldiers unawares, looking relaxed as if enjoying the truce.
Government spokesman Jihad Makdissi, speaking before the report of the bombing of the army bus, said Damascus was "fully committed" to Annan's success and that there would be no breach of the ceasefire by the government if the rebels did not attack.
The 13-month crisis has pushed pressure waves out along faultlines that criss-cross the Middle East, pitting Sunni Arabs against Shi'ite Iran, and alarming Turkey, whose prime minister on Thursday cited his country's right to call on its NATO allies to defend a border where Syrian troops opened fire this week.
Burhan Ghalioun, exile head of the opposition Syrian National Council (SNC), told Reuters he expected demonstrations on Friday after weekly prayers - a feature of the revolt that had been subdued by violence in recent months. But he did not trust the authorities who had their "hand on the trigger".
"The Syrian people will go out tomorrow in the biggest possible numbers so that the Syrian people can express their will," Ghalioun said. "While we call on the Syrian people to protest strongly... we ask them to be cautious because the regime will not respect the ceasefire and will shoot."
The Interior Ministry later said - ominously - that only pre-authorised demonstrations would be permitted by police.
A Norwegian general who has spent the past week in Damascus discussing a planned UN peace observer mission said he was "cautiously optimistic". But Major-General Robert Mood, who was briefing Annan in Geneva, told Norway's NTB news agency: "Both sides are plagued by a very high degree of mutual suspicion.
"It's terribly difficult for them to cross that abyss."
Annan's plan is for 200 to 250 unarmed UN-mandated observers to monitor the ceasefire. A similar Arab League mission ended in disarray amid mounting violence in January.
Spokesman Makdissi told the BBC Syria wanted the monitors to start "as soon as possible to monitor any possible violations".
Basma Kodmani, a spokeswoman for the SNC in Geneva, said even without monitoring there was ample video and eyewitness evidence showing troops were still out in force in town centres: "The real test today for us is if people can go down and demonstrate peacefully," she said. "This is the reality check."
Highlighting the wider international ramifications of the crisis, British Prime Minister David Cameron said Russia and China should take note that Assad was failing to abide by terms endorsed by the UN Security Council to which they belong:
"I feel an immense sense of frustration because the world has come together behind this Kofi Annan plan," he told the BBC. "This is a plan, remember, that is not just backed by those of us who have been pushing for action on Syria, it's also backed by China and Russia. And yet Assad is deliberately flouting it."
In an indication of how the Western leaders who intervened to help rebels topple Muammar Gaddafi in Libya last year are reluctant to do likewise in Syria, Cameron made it clear that the main thrust of Western efforts would still be to persuade Moscow and Beijing to accept tighter diplomatic sanctions.