Benazir Bhutto, the exiled Pakistani Opposition leader, will return home this year after nearly a decade in exile, seeking to cut a deal with the military leadership that could lead to her becoming prime minister again.

Speaking to The Times from her home in Dubai, Miss Bhutto said that she would be prepared to work with General Pervez Musharraf, the President of Pakistan and, until now, her avowed rival.

There are indications from Islamabad that General Musharraf is interested in allowing Miss Bhutto to return and contest elections this year.

She remains the most popular political figure in Pakistan, despite a string of corruption charges against her. Her party received the highest number of votes in the last parliamentary elections in 2002.

“I plan to go back to Pakistan by the end of this year, whether Mr Musharraf would like it or whether he would not like it,” Miss Bhutto, 53, said.

She demanded that outstanding corruption charges against her be dropped and that full democratic rights be restored to Pakistan, which has been under military rule since a coup in 1999. Miss Bhutto said that she would be prepared to work with Mr Musharraf if he restored democracy and allowed free elections monitored by foreign observers.

“If the people vote for my [Pakistan People's Party] and Parliament elects me as prime minister, it would be an honour for me to take up that role, and General Musharraf would be there as President, so I think a good working relationship between him and me would be a necessity for Pakistan,” she told Ginny Dougary, of The Times.

General Musharraf has often vilified the former Prime Minister for plundering the country during her two terms in the 1990s and had vowed never to let her return. The Oxford-educated Miss Bhutto has condemned him as a usurper who has allowed Islamic extremists political space.

Analysts said that General Musharraf was desperate to strike a deal with Ms Bhutto as he confronted mounting public outrage over his dismissal of the country’s top judge. The widespread protests over the removal of Chief Justice Iftikhar Muhammad Chaudhry came at a critical time for the general because he faces presidential elections in October.

Miss Bhutto realises that an agreement with the powerful military is equally beneficial for her. As part of the deal, corruption charges against her and her husband, Asif Ali Zardari, will be withdrawn. Mr Zardari, who spent eight years in jail, was freed on bail in December 2004 and lives in New York.

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