Mr Sharif's exile took many by surprise

He said the decision to pardon Mr Sharif, who had been serving a life sentence on corruption charges, came at the suggestion of the Crown Prince of Saudi Arabia.

He said he believed that it marked a "new era" in Pakistan's national politics, ending the domination of the domestic scene by Mr Sharif and Benazir Bhutto - another former prime minister who is currently in self-imposed exile.

"It will usher in an era of politics of reconciliation and money-free politics. It will bring in overall political harmony and contribute towards economic development," he said.

'Bold decision'

He called on the people of Pakistan to consider the situation objectively and not to panic.

The announcement of Mr Sharif's exile earlier this month provoked surprise and criticism.

Some people thought it was a sign the military government was reneging on its commitments to stamp out corruption.

But General Musharraf said that world leaders had voiced approval for his "bold" decision which was based on "tolerance and moderation".