Britain has defended the knighthood, stressing the importance of free speech and saying it was part of a trend of honouring Muslims in the British community.
A crowd of about 300 people in the capital Islamabad, watched over by riot police carrying batons and shields, chanted "Our struggle will continue until Salman Rushdie is killed!"
Fazlur Rehman, a pro-Taliban cleric and leader of the parliamentary opposition, told the protesters: "Britain must withdraw the knighthood and hand Rushdie to Pakistan to be punished under Islamic laws."
Later, Aziz lashed out at Britain in Pakistan's parliament.
"we condemn the decision to award a knighthood to Rushdie," he told the national assembly, or lower house.
"It has hurt the feelings of Muslims. Muslims will never tolerate derogatory remarks against the last Prophet Mohammed."
In Karachi more than 1,000 people chanting "Death to Rushdie, Death to Britain" gathered outside the city's main conservative Binori mosque after Friday prayers.
The protesters chanted that they backed comments made in parliament on Monday by Ijaz-ul Haq, the religious affairs minister, that Rushdie's knighthood justified suicide bombings.
They also hit out at Benazir Bhutto, former prime minister, for calling for Haq's resignation.
|"Whosoever kills him will |
be the hero
Khwaja Saad Rafiq, opposition politician
In the central city of Multan there were several protests drawing more than 750 people. Members of the local paramedics association torched effigies of Rushdie and the Queen, a photographer said.
About 700 Muslim activists and members of cricketer-turned-politician Imran Khan's party chanted "Curse Rushdie, Long Live Osama (Bin Laden)" in northwestern Peshawar.
Hundreds of protesters burned tyres, a Rushdie dummy and posters from a local cinema in the eastern town of Gujrat. They also blocked a main road for two hours.
Several hundred protesters also gathered in the eastern city of Lahore and in Quetta, a southwestern city near the Afghan border.
Arbab Ghulam Rahim, chief minister of Sindh province, said he was returning a medal given to his grandfather by Britain's King George VI in 1937 and a title awarded to his uncle by the British in 1945.
"I will now return these as no Muslim can accept any title from the Queen after she honoured Salman Rushdie," he said.
In Iran, a prominent cleric said that the fatwa issued by the late Iranian Ayatollah Ruholla Khomeini in 1989 calling for Rushdie's death was "still alive".
"In the Islamic Iran that revolutionary fatwa of Imam [Khomeini] is still alive and cannot be changed," Ahmad Khatami said in comments during Friday prayers that were broadcast on state radio.