The Pakistan army should urge President Pervez Musharraf to quit during the next two months, a Brussels-based think-tank said in a report on the deteriorating situation following the assassination of Benazir Bhutto.

"It is time to recognise that democracy, not an artificially propped up, defrocked, widely despised general, has the best chance to provide stability and turn back extremists' gains," Robert Templer, International Crisis Group's Asia Program Director, said in a statement issued with the report on Thursday.

Musharraf, who came to power in a coup in 1999, stepped down as army chief in November before being sworn in for a second five-year term as president.

To secure the presidency, Musharraf got himself elected by a parliament that was about to reach the end of its own term, and he declared emergency rule to purge the Supreme Court of judges who appeared set to annul his re-election. He lifted emergency rule on December 15.

"If Musharraf refuses to resign voluntarily, it is in the interest of the military establishment, his sole bastion of support, to distance itself from its former chief lest it, instead of him become the target of public hostility," the ICG said.

"Particularly the United States ... should encourage the military leadership under General Ashfaq Kayani's command to protect its ability to continue to serve Pakistan by persuading Musharraf to resign in the interest of national reconciliation."

The ICG, which has been highly critical of Musharraf and has influence within the U.S. Congress, said concerns that the security situation in Pakistan would become worse if Musharraf quit were misplaced.

"By continuing to back him, Western governments might not just lose the battle for Pakistani hearts and minds, but could also be faced with the nightmare prospect of a nuclear-armed, Muslim country of 165 million descending into violent internal conflict from which only extremist forces would stand to gain."

It said Senate chairman Mohammadmian Soomro should take over as interim president and appoint a caretaker government in consultation with all the major political parties to oversee the election process.

The report described the postponement of an election from January 8 to February 18 in the wake of Bhutto's assassination as "reasonable" but said other steps were needed to restore democracy in Pakistan.

These other steps included the full restoration of the constitution and an independent judiciary, the reconstitution of an Election Commission acceptable to all major parties, and the transfer of power to elected civilian hands.