The Pakistani president said on Wednesday that Bhutto should come back after the supreme court had reached a decision on his re-election.
"I would say she should not come before. We must tide over these problems. She should come later," he told the private ARY television channel.
Asked whether she should return after the decision, he said: "Yes, certainly.
"There is no case (against her) as such," he said, when asked if she might be arrested.
"Whatever the law of the land dictates, we'll follow."
In a step towards a deal being reached, Musharraf issued a decree last week dropping corruption charges against Bhutto and other public office holders from 1985 to 1999.
"Pakistan needs a military leader who can control both civil and possible military extremism"
Creative_person01, Islamabad, Pakistan
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In return, members of parliament from Bhutto's party, unlike other opposition parliamentarians, did not resign but only abstained when legislators voted for Musharraf in the poll earlier this month, giving the process vital legitimacy.
Musharraf, who seized power in a military coup in 1999, has promised to resign as army chief before taking the oath of office for the second term and his current term expires on November 15.
Opponents argue that he should have been disqualified from running due to a constitutional bar on public servants seeking elected office.
Shaukat Aziz, the current prime minister, said on Wednesday that forthcoming general elections will be held in early January, a key step in country's move to democracy.
"With the presidential election held successfully, the first phase of the election process has been completed and now general elections will be held in a transparent and free manner," he said.
Bhutto, who served as prime minister from 1988 to 1990 and 1993 to 1996, has vowed to lead her party to victory in the polls, the first in Pakistan since 2002.