President Musharraf of Pakistan proposed an unprecedented power-sharing deal with his most bitter rival yesterday in a attempt to save his political career.

General Musharraf held secret talks with Benazir Bhutto in Abu Dhabi to discuss an agreement that could allow her to return to Pakistan after years in exile.

Under the agreement the military leader would be granted another five-year term as president, while Ms Bhutto, twice prime minister of Pakistan, would be allowed to return in September to contest parliamentary elections, exonerated of corruption charges made against her.

However, last night the talks appeared to have stalled over General Musharraf’s insistence that he should be allowed to retain his dual role as army chief and president.

The President had hoped to announce a new interim political arrangement next week to supervise parliamentary elections. Hamid Nasir Chatta, a former speaker of the National Assembly, is expected to replace Shaukat Aziz as Prime Minister.

Yesterday’s meeting took place as General Musharraf faced the most serious challenge to his authority since he seized power in a coup in 1999. His standing suffered a further blow this week when the Supreme Court annulled his decision to suspend the country’s top judge.

There have also been reports of growing dissent within the military, which has suffered casualties in intense fighting with Islamist militants in Pakistan’s northern tribal region. Dozens of army personnel have reportedly been court martialled for defying orders. More than 300 people, most of them army and paramilitary soldiers, have been killed this month in suicide bomb attacks.

Yesterday’s meeting was the second this year between General Musharraf and Mrs Bhutto. A previous meeting, also in Abu Dhabi, failed to reach any agreement in January. However, the two sides continued secret negotiations through intermediaries.

Many political observers agree that General Musharraf has run out of options as he seeks another term as president. He faces a stark choice of joining forces with the conservative Islamists, who are bitterly opposed to his pro-American policies, or to ally himself with Mrs Bhutto’s pro-west liberal Pakistan People’s Party .

General Musharraf has been under growing pressure from Washington to crack down on the pro al-Qaeda militants who operate close to the border with Afghanistan.

The creeping Talebanisation of Pakistan’s northern border areas presents the most serious threat to the country’s internal stability and to regional security. An intelligence assessment report released in Washington recently said that al-Qaeda had been allowed to regroup in tribal areas.

The violence that has rocked Islamabad and the northern region signalled a new and violent turn in the confrontation between the security forces and militants linked to al-Qaeda.

The charismatic Ms Bhutto, who during her exile has lived in London and Dubai, is still the most powerful political figure in Pakistan. She has faced several charges of corruption but has not been convicted. In the last parliamentary election, held in 2002, her Pakistan People’s Party received the highest number of votes. Under the constitution Ms Bhutto cannot be elected as prime minister a third time, but her supporters said that the provision could be removed after the elections.

Britain and the United States are believed to favour her return to government, hoping that an alliance with General Musharraf would isolate the radical Islamist parties.

Times Recommends

• Tehran cannot live up to its rhetoric
• The new unicycle that will ‘change the world’
• We cannot wish away Iran’s bomb