Pakistani President Pervez Musharraf was sworn in for a second term on Thursday, this time as a civilian leader, a day after quitting as army chief and fulfilling a promise many Pakistanis doubted he would keep.

Musharraf, sworn in by the chief justice he hand-picked after purging the Supreme Court under emergency rule, immediately reached out to old political rivals, welcoming their return from exile as good for reconciliation.

"This is a milestone in the transition of Pakistan to complete essence of democracy," Musharraf, wearing a traditional sherwani tunic, said in a speech after he taking the oath at a ceremony in the presidency in Islamabad.

Musharraf's power and influence in nuclear-armed Pakistan, which is vital to the U.S. campaign against al Qaeda and its strategy in neighbouring Afghanistan, are bound to be diminished now that he has relinquished command of the army.

But he said the country would benefit with him being a civilian leader and his hand-picked successor, General Ashfaq Kayani, in charge of the military.

"Pakistan will go stronger with me as a civilian president and General Kayani as army chief," Musharraf said.

In his first public comments on former prime minister Nawaz Sharif since he came back on Sunday from seven years in exile, Musharraf said he welcomed his return, as well as that of another old rival, Benazir Bhutto, who came back last month.

"I personally feel this is good for the political reconciliation I have spoken of," Musharraf said.

Sharif, the man Musharraf ousted in 1999, and Bhutto, also a former prime minister, are considering boycotting a January 8 general election that they say cannot be free and fair under emergency powers, although analysts expect them to take part.

Musharraf, who was due to address the nation later on Thursday, made no mention of when he might end the emergency, imposed on November 3.

Musharraf will need support during his five-year term from what analysts expect to be a hung parliament. He could face impeachment over manoeuvres to stay in power which rivals say violated the constitution.

Sharif told reporters on Wednesday Musharraf's oath of office had no legitimacy or legal basis.

"The actions taken on November 3 are unacceptable to us. We condemn them and want them to be rolled back," Sharif said.

"NO GOING BACK"

Musharraf won re-election in a vote by legislators on October 6 and later suspended the constitution, declared emergency rule and purged the Supreme Court to block opposition legal challenges to his victory while still a serving officer.

The opposition is still challenging his grip on power.

Protesting lawyers clashed with police in Lahore as Musharraf was being sworn in.

"Our battle is to block military intervention for ever," said Syed Mohammad, president of the Lahore bar association, as lawyers and police started pelting each other with stones.

Black-suited lawyers have been at the forefront of opposition since Musharraf tried to dismiss the chief justice in March.

Referring to threats to boycott the election, Musharraf said no one would be allowed to derail it.

"There is no going back, there is no change. So, anyone who is talking of boycott, should hear this out," he said, adding that the elections must be fair, free and transparent.

Musharraf, who cited rising militancy when he imposed the emergency, also said the military had "broken the back of the spread of terrorism" from remote tribal lands on the Afghan border into so-called settled areas.

"We have to defeat terrorism, there is no choice. Failure is not an option," he said, hours after five soldiers were killed in a blast near the Afghan border.

Ordinary Pakistanis welcomed Musharraf's departure from the army and some said it was time he left politics altogether.

"It's not a good thing for Musharraf to remain in office. He thinks everything is about him, that no one can interfere, that he is the king," said Hafiz Wahab Siddiqui, a 20-year-old business administration student in Lahore.

"He follows American rule. He is a servant of America."