US visit
 
Musharraf said the country was going through "difficult times" after he declared a state of emergency but that Pakistan had progressed since he took power in 1999.

Special report

"Certainly the glass is not half full. Certainly we have a thousand things to do. But we have to be proud of the fact that we have made an almost empty glass to the half-full level," he said.

Musharraf has said that emergency rule was imposed in an effort to crack down on fighters linked to al-Qaeda and the Taliban.

He also suspended the constitution to curb the activities of what he sees as an interfering judiciary.

The caretaker government was installed ahead of a visit by John Negroponte, deputy US secretary of state, later on Friday.

Negroponte is expected to meet Musharraf to press the Pakistani president to restore the constitution, step down as head of the army and ensure free and fair elections.

The US official is not expected to meet Benazir Bhutto, leader of the opposition Pakistan People's Party (PPP).

Bhutto says she will not accept power-sharing
with Musharraf after the emergency law [AFP]
Bhutto, who had a house arrest order against her lifted hours before the interim cabinet was sworn in, called for a "people's revolution" to end Musharraf's eight-year rule.

"This caretaker government is an extension of the PML-Q and is not acceptable," she told a news conference on Friday, referring to Musharraf's party.

Bhutto said she was in negotiations with other political leaders, including exiled prime minister Nawaz Sharif, to try to form a united opposition front.

"I believe it is hard to build a coalition but I will take on the task... I talked to Nawaz Sharif and told him that I am discussing with all leaders the formation of an interim government," she said.

Kamal Hyder, Al Jazeera's correspondent in Islamabad, said that Bhutto's new strategy to ally party with other opposition groups could be a face-saving measure.

"Her credibility was greatly damaged after she made a deal with Musharraf," he said. 

"When she came to Pakistan her party told her she had lost points among the electorate and that the people would not vote for her if she continued with that alliance. Therefore she decided to take a U-turn."

Hyder said that supporters of Jamiat Ulema-e-Islam (JUI), another opposition party, had also started protests in Peshawar against Musharraf's emergency law.

Arrest order lifted

The house arrest order against Bhutto was lifted hours before the new cabinet was sworn in.

"The house is no longer a sub-jail but security will remain for her own protection. She's free to move and anyone will be able to go to the house," Zahid Abbas, a senior police official, said on Friday.

Bhutto, a two-time former prime minister, had been held at her residence in the eastern city of Lahore for three days.

Before the arrest order, she had planned to lead a protest march from Lahore to Islamabad to protest against emergency law.

Bhutto has called for a unity government in Pakistan and urged all opposition parties to come on board.

She has also demanded that Musharraf steps down as president and says she will not serve as prime minister under him.

Hundreds of political activists and scores of lawyers have been detained since emergency rule came into force.