"You are the hitting hand against whoever considers undermining the nation's security and stability," King Abdullah said, addressing Saudi security forces.
He rewarded the interior ministry by ordering the creation of 60,000 more military and security jobs in the ministry and a large number of promotions for soldiers and officers.
And he coupled the warning with an announcement of massive social benefits including higher unemployment payments, better health care and improved housing services and loans.
Among other things, he ordered the pumping of 250 billion riyals ($67 billion) into accommodation welfare to build as many as 500,000 housing units.
This is in addition to a package of social benefits worth an estimated $36 billion, mostly aimed at youth, civil servants and the unemployed, announced earlier this month.
Saudi's oil-rich Eastern Province, where most of the country's Shiite minority lives, has been rocked by protests in recent days.
Tensions have flared since Saudi forces rolled on Monday into Bahrain to help the neighbouring kingdom's Sunni Muslim ruling dynasty crush Shiite-led unrest.
Saudi Shiites rallied Friday for a fourth consecutive day to show solidarity with protesters in Shiite-majority Bahrain and demand the release of prisoners.
Witnesses said security forces fired tear gas at demonstrators in the city of Qateef where shots also rang out. Marches were also held in the cities of Tarut, Safwa and Awamiya.
A witness said that about 10 Saudi Shiite protesters were hurt in clashes with riot police on Friday in the city of Omran as they rallied in support of Bahraini Shiites and called for the release of prisoners.
In addition to new houses, all civil servants and the military were gifted the equivalent of two months' salary, and the same to university students, the king said.
The monarch also ordered a minimum monthly wage of 3,000 riyals ($800) for civil servants and introduced monthly unemployment benefits of 2,000 riyals for job-seekers. Payments will start after about eight months.
Unemployment in the world's biggest crude exporter was 10.5 percent last year, but was as high as 30 percent in the 20-29 age group with an estimated 450,000 Saudi citizens without jobs.
Saudi Arabia, which is pumping around nine million barrels of oil a day, has more than $450 billion in assets thanks to high oil prices over the past decade.
The king also thanked the religious establishment for helping against protests through issuing fatwas, or religious edicts, outlawing demonstrations.
The king forbade any criticism of the head of the senior religious scholar, Sheikh Abdulaziz al-Shaikh, and ordered around one billion riyals in assistance to various religious bodies including the religious police.
Another decree called on the authorities to force the private sector to create more jobs for Saudis. At present, around 90 percent of several million jobs in the private sector are occupied by foreigners who number six million.
The king also ordered the establishment of a national anti-corruption authority to be headed by a high-ranking official in the capacity of a minister.
A national anti-corruption body and the holding of officials to account have been major demands for reformists in the ultra-conservative Muslim kingdom. The corruption watchdog will be directly under the king.