Hollande said France "has to take all necessary precautions" in the face of a terrorist threat, including "surveillance of our public buildings and our transport network."
The French leader evoked Vigipirate, France's national security alert system, created in 1978 and updated several times.
The move came after a botched French commando raid in Somalia to free an intelligence agent which killed at least 19 people including two French soldiers, and also the deployment of French air power to help the army in Mali stop Islamist rebels from advancing south.
One of the Islamist groups targeted by French military action in Mali, Ansar Dine, had earlier threatened reprisals against France.
The Shebab, al-Qaida's local franchise in Somalia, which has held the Frenchman for more than three years, also issued a warning after the failed rescue bid.
"In the end, it will be the French citizens who will inevitably taste the bitter consequences of their government's devil-may-care attitude towards hostages," they said in a statement.
Prime Minister Jean-Marc Ayrault said the measures would come into force "immediately."
The Vigipirate system defines four levels of threats represented by five colors: white, yellow, orange, red and scarlet.
The levels call for specific security measures, including increased police or police-military mixed patrols in subways, train stations and other vulnerable locations.
The highest level scarlet includes measures that are highly disruptive to public life. France has maintained a second level, red, since the London bombings in July 2005.
Ayrault said the red level "would be maintained for now."
"However, several measures will be reinforced immediately," he said, adding that these "concerned public transport especially the rail and air networks and large gatherings of people."
"The government is mobilised and is carefully watching how the situation is evolving," he said.
The order came a day ahead of a giant march in Paris, expected to draw tens of thousands, to protest the government's plan to legalise same-sex marriage and adoption which has drawn the ire of influential Catholic and Islamic groups.
The top threat level was briefly in force in France's southwestern Midi-Pyrenees region after Islamist gunman Mohamed Merah went on a shooting spree in March last year killing seven people.
Source: http://timesofindia.feedsportal.com/fy/8at2EuL0ini4P3t8/story01.htm
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