The 54-year-old plans to fly back to Pakistan on October 18 to contest a parliamentary election due by mid-January.
"We expect there will be no obstacle in the path of my return," she said.
On Wednesday, Bhutto said talks with Musharraf over a power-sharing arrangement had "totally stalled".
Bhutto added that she was still waiting to see the draft of a national reconciliation bill which would spell out the understandings reached with Musharraf in "hectic negotiations and discussions" overnight.
"Pakistan needs a military leader who can control both civil and possible military extremism"
Creative_person01, Islamabad, Pakistan
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The two-time prime minister said that if a deal is agreed, her party members would not quit parliament, but would instead either vote for their own candidate or abstain.
Musharraf, who seized power a 1999 military coup, is expected to win a second term but would benefit from Bhutto's support ahead of general elections due in early 2008.
He has said he will step down as head of the military before being sworn in next month for a new presidential term, a move welcomed by Bhutto.
"It is much better if we can get the transfer from dictatorship to democracy through peaceful political means and avoiding bloodshed," she said.
In Islamabad, ministers held talks with some of Musharraf's political allies who oppose any agreement with Bhutto.
"God willing, there will be an agreement, said Sheikh Rashid, the railways minister, a close confidant of Musharraf's.
"We do not need Pakistan People's party votes but we need them to stay in the assembly for the sake of credibility," he said.
The president still faces last-ditch supreme court challenges against the legitimacy of Saturday's election, which will be carried out by a ballot of the two national houses of parliament and four provincial assemblies.
Musharraf has not removed a ban on anyone serving a third term as prime minister, which would disqualify Bhutto.
And she wants him to give up his sweeping powers to dissolve parliament - something she said would be addressed in "stage two" of negotiations.
Bhutto led the government twice between 1988 and 1996, but was overthrown amid allegations of corruption.
She went into exile eight years ago to avoid arrest on corruption cases registered by another exiled former leader, Nawaz Sharif.