A committee of foreign ministers meeting in Uganda "suspended Pakistan from councils of the Commonwealth pending restoration of democracy and rule of law", Don McKinnon, the Commonwealth's secretary-general, told journalists.
The move is seen as largely symbolic. Democracy call
Kamal Hyder, Al Jazeera's correspondent in Islamabad, said: "The Americans are continuing their support for Pakistan ... so even though it may come as a surprise to Pakistan that it has been suspended, economically its not likely to have a big impact."
Pakistan was previously kicked out of the 53-member group of former British colonies in 1999 after Musharraf seized power in a coup, though it was reinstated in 2004.
McKinnon said that the Commonwealth may review the suspension after January parliamentary elections in Pakistan and a group of Commonwealth foreign affairs ministers may visit the country next year.
In a statement, Gordon Brown, the British prime minister, said: "Commonwealth Ministers have made their clear and necessary decision on suspension of Pakistan from the Commonwealth.
"President Musharraf has said that he will take the steps necessary to restore democracy. The Commonwealth is strongly of the view that he must now do so."
Return from exile
Musharraf also faced a further challenge after it was announced on Thursday that Nawaz Sharif, the exiled opposition leader currently in Saudi Arabia, would make another attempt to return home.
Chaudhry Shujaat Hussain, president of Musharraf's ruling Pakistan Muslim League-Q party, said "there is some deal" with Saudi authorities for Sharif to come back.
He suggested that Sharif would be back in Pakistan before the January 8 parliamentary elections.
"We are ready to face him and he has to face the people," Hussain said on Dawn News television.
Sharif's return would bolster opponents of Musharraf ahead of parliamentary elections planned for January.
The former prime minister's plan to return was announced hours after the supreme court, manned by judges appointed by Musharraf, dismissed a sixth and final legal challenge against the president's re-election.
Court backs Musharraf
Government officials said Musharraf could now quit his post as chief of the army and take the presidential oath as a civilian as early as Saturday.
Sharifuddin Pirzada, Musharraf's chief legal adviser, said there was now no legal obstacle to his re-election. He said: "Now the court has to give us this in writing."
Speaking to Al Jazeera about the supreme court decision, Imran Khan, an opposition politician and former cricketer, said: "No one views this ruling as credible."
"The only thing left is to discredit these elections by boycotting them. George Bush [the US president] is backing one man against 160 million people."
Khan had previously been jailed under Musharraf's emergency rule. He, along with more than 5,000 others, were released over the last few days.
Source: Al Jazeera and agencies