While Musharraf was "determined to retain power at all costs," his regime was facing the most serious challenges of his eight-year rule, the International Crisis Group (ICG) said in a report.

Growing demands from both the political opposition and civil society for an end to military rule meant the end of Musharraf's regime was "now a matter of time," the Brussels-based group said in its report, titled "Elections, Democracy and Stability in Pakistan."

"The manner in which elections are held, however, will determine if there is a peaceful, orderly democratic transition or a violent transition with the attendant costs for a fragile state," it said.

General elections are due in Pakistan by early 2008, the first since late 2002. Army chief Musharraf seized power in a bloodless coup in 1999.

Officials have said Musharraf aims to be re-elected separately by parliament as president-in-uniform, ahead of a constitutional deadline for him to quit the military by the end of this year.

The ICG accused Musharraf's government of "rigging elections," and said should the president declare emergency rule in the face of recent crises it could "portend disaster, nationally and regionally".

"President Musharraf and the military have maintained power by suppressing democratic forces and rigging national and local elections," the report said.

"Empowerment of Islamist parties to counter moderate opposition has been significant and is now essential to the military government.

"But the growing pro-democracy movement is leaving Musharraf with few choices, and the judiciary can no longer be counted on to endorse unconstitutional acts.

"Another rigged or stolen election could possibly lead to a violent confrontation between the military and protesters," the ICG said.

Pakistan has been rocked by violence in the two weeks since security forces launched a deadly raid to dislodge religious militants holed up in Islamabad's Red Mosque. The raid and preceding siege left more than 100 people dead.

Since then, more than 200 people, many of them police and troops, have died in a spate of suicide attacks and rebel raids across the country, piling pressure on Musharraf.

The president faces further problems after the Supreme Court this month overturned his suspension of chief justice Iftikhar Muhammad Chaudhry, who became an icon of opposition after his ouster in March.

Opponents said Musharraf tried to force out Chaudhry to weaken the judiciary in case of opposition legal challenges to his plans to stay on as military ruler.

The ICG called on the Pakistani government to hold "free, fair and transparent" elections and said Washington -- which regards Islamabad as a key ally in its "war on terror" -- should encourage the re-emergence of democracy.

"Backing a deeply unpopular military regime is no way to fight terrorism and neutralise religious extremism," it said.

"The international community should support its natural civilian allies, including Pakistan's most popular national parties, Benazir Bhutto's Pakistan People's Parry and Nawaz Sharif's Muslim League."

Musharraf met secretly with Bhutto in Abu Dhabi on Friday to discuss a pre-election power-sharing deal, Parliamentary Affairs Minister Sher Afgan Niazi told AFP Monday.