Former prime minister Nawaz Sharif (L) and Asif Ali Zardari (R), widower of the slain opposition leader, Benazir Bhutto, leader of the Pakistan People's Party, speak during a joint news conference in Bhurban near Islamabad March 9, 2008. REUTERS/Faisal Mahmood

ISLAMABAD (Reuters) - The widower of Benazir Bhutto held talks with leaders of his Pakistan People's Party on Monday to decide on a candidate for prime minister after agreeing on a coalition that could force President Pervez Musharraf from power.

Asif Ali Zardari, who became head of the PPP after Bhutto's assassination in December, signed an agreement on Sunday with former prime minister Nawaz Sharif to form a coalition government.

The pact sets the scene for confrontation with U.S. ally Musharraf, particularly as Zardari and Sharif promised to reinstate judges Musharraf dismissed in November, just as they were expected to rule his October re-election by legislators, while still army chief, unconstitutional.

The two leaders also agreed that the PPP should nominate a candidate for prime minister as it won the most seats in February 18 elections, though not enough to rule alone. Sharif's party came second while the main pro-Musharraf party came a poor third.

Zardari had begun sounding out members-elect of his party before deciding on a candidate, a party spokeswoman said.

"The members have reposed full confidence and given full authority to Mr. Zardari to name the candidate for the prime minister," Sherry Rehman, a spokeswoman for the party, told reporters after Zardari met his party members-elect.

Consultations would continue over the next few days and Zardari would announce the candidate after Musharraf convened the first session of the new National Assembly, she said.

Musharraf said last week it would be a week or more before the National Assembly was convened but Sharif and Zardari said on Sunday the session should be called immediately.

Makhdoom Amin Fahim, Zardari's deputy and a close aide to Bhutto, had been seen as the likely choice for prime minister but his absence from Sunday's talks between Zardari and Sharif has fuelled speculation he might be out of the running.

Ahmed Mukhtar, an industrialist and commerce minister in Bhutto's cabinet, has emerged as another strong contender.

SUPPORT FOR ZARDARI

Zardari can't become prime minister because he did not contest the elections and a prime minister must be a member of parliament. But some party members want him to stand in a by-election and go for the top job.

"We told him that it's been a tradition that the chairperson of the party should also be prime minister," said a PPP member elected to the National Assembly who met Zardari at the weekend.

"We told him we will fully support him if he becomes prime minister," said the politician, who declined to be identified.

Western allies and Pakistan's neighbors, concerned about instability in a nuclear-armed state reeling from militant suicide bombings, fear more political upheaval in case of confrontation between the president and the new government.

Sharif, the prime minister then army chief Musharraf ousted in a 1999 military coup, is adamant that Musharraf must step down although Zardari has not been so outspoken.

But both of them have vowed to banish the military-led establishment from politics and spoken of the need to scrap presidential powers to dismiss a government.

Sharif had also been insisting the judges Musharraf dismissed be reinstated.

The judges, including the former Supreme Court chief justice, are likely to take up legal challenges to Musharraf if they are restored, as Zardari and Sharif promised to do within 30 days of the formation of a government.

Two smaller parties have also agreed to join a PPP-led coalition and together the four parties would control more than two-thirds of lower house seats. That would put them in a strong position if they wanted to try to impeach Musharraf.

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