Members belonging to the ruling coalition and a conservative Islamist alliance joined hands on Monday to endorse a set of constitutional amendments that also allow Musharraf to hold the post of army chief for one more year.
The bill, approved by 248 of the 342 house members needs to be passed by Pakistan's upper house, or Senate, where the ruling party and the Islamist alliance enjoy the required strength.
The opposition, comprising the parties of two former prime ministers, Benazir Bhutto and Nawaz Sharif, boycotted the voting.
The government struck a deal with Islamist Muttahida Majlis-e-Amal (MMA) earlier this month to put the amendments to a vote in parliament, ending a year-long political impasse.
The deal will be sealed during a vote of confidence in Musharraf, which would keep him in power until 2007.
"It will help end uncertainty and bring stability in the country," said Information Minister Shaikh Rashid Ahmad. "The vote of confidence on President Musharraf is expected on 1 or 2 January."
The main opposition Pakistan Peoples' Party (PPP) described the passage of the bill as a dark day in the country's history.
A blast in Rawalpindi on Saturday
targeting the president killed five
"We condemn the indecent haste with which a constitutional amendment of far-reaching implications for democracy and civil society was bulldozed in the National Assembly today," said Farhat Allah Babar, the PPP spokesman. The amendment bill was passed by the assembly in three days.
Babar said the military "forcibly rewrote the constitution" with the help of its allies in the Islamist parties.
The opposition says the amendments put too much power in the hands of Musharraf and condoning him as president in a military uniform for another year was against the spirit of democracy.
Musharraf, a staunch ally of Washington in its so-called "war against terror", survived an assassination attempt on Thursday blamed on Islamist hardliners.
He has angered many by dropping support for Afghanistan's former Taliban rulers, arresting hundreds of members of al-Qaida and cracking down on domestic Islamist groups, while at the same time edging towards peace with rival India.