Ending the suspense on government formation in Pakistan, the two main opposition parties on Thursday announced they would form a new ruling coalition, but did not name any prime ministerial candidate.

Coverage: Pakistan Votes

The announcement of the two parties formally joining hands was made after a hectic two- our negotiation between Pakistan People's Party co-chairman Asif Ali Zardari and Pakistan Muslim League-N leader Nawaz Sharif after they overcame differences on some key issues.

The leaders discussed the modalities of government formation, two days after the PPP and PML-N together got majority, together bagging 153 seats in a House of 272.

"We have agreed on a common agenda. We will work together to form a government together in the Centre and in the provinces," Sharif said at a joint news conference with Zardari, husband of the slain PPP leader Benazir Bhutto [Images].

The announcement came as a setback to President Pervez Musharraf [Images] who was hoping to wean away PPP from the PML-N to have truck with the defeated PML-Q in forming a new government.

"We will ensure that you complete a full five year term," said Sharif looking at Zardari, who has emerged as the kingmaker in Pakistan's return to democracy.

Zardari said there were a 'lot of grounds to cover' between the two parties, but said: "Inshallah (God willing) we will be meeting off and on. In principle, we have agreed to stay together."

The coming together of Zardari and Sharif may spell doom for Musharraf, who has rejected strident calls by the opposition parties for his resignation. Musharraf's presidency ends in 2011.

"We are trying to form a national consensus government," said Zardari.

Sharif said the two parties had overcome their differences over his demands for the immediate restoration of the sacked chief justice Mohammed Iftikhar Choudhry. The differences had cast a shadow on Thursday's parleys.

"In principle there is no disagreement on the restoration of the judiciary. We will work out the modalities in the Parliament," the two-time premier said. Zardari has insisted that the Parliament should take a view on bringing back the deposed judges.

Zardari said the coalition would not involve any parties from the alliance that backed Musharraf in the present parliament saying "We are not looking at pro-Musharraf parties. 

"We have come to the same position that we started this fight with -- that we will be together in the struggle for democracy (and) we intend to stay together in Parliament," said Zardari.

"The future of democracy is within our grasp, we will strengthen parliament and democracy. We will work for Pakistan together and we will make a stronger Pakistan."

Asked whether the new government would work with Musharraf, Sharif -- who has insisted in the past few days that the President should quit -- said: "You know my views. The nation has given its verdict; it is from every nook and corner of Pakistan. The sooner he (Musharraf) accepts it, the better it is for him."

Sharif read out a statement which said: 'In principle there is no disagreement on the restoration of the judiciary. We will work out the modalities in Parliament.'

Zardari said the two leaders had agreed that the first action of the new Parliament would be to pass a resolution seeking a UN-led inquiry into the assassination of his wife Benazir Bhutto.

Sharif said, "The sooner he (Musharraf) accepts the verdict the better it is for him."

Regarding prime ministership, there were reports that Fahim Maqdoom of the PPP was the front runner, but there is no official word on it.

Sharif had also said that the PPP had the right to form the next government.

"We have decided to work together for the interest of Pakistan, democracy and supremacy of democratic institutions, and rule of law in the country," Zardari said.

"We intend to strengthen Pakistan together; we are not looking at pro-Musharraf forces. I don't believe pro-Musharraf forces exist," Zardari said.

Zardari said all of Pakistan's problems 'can be solved by the political forces.'

Image: Asif Ali Zardari shakes hands with former premier Nawaz Sharif after their meeting at his residence in Islamabad on February 21.
Photograph: Aamir Qureshi/AFP/Getty Images