Bhutto's Pakistan Peoples Party, led by her widower, Asif Ali Zardari, will likely lead the coalition after they appeared to win the most seats.
Zardari would be supported in a coalition by Sharif's Pakistan Muslim League-N party, a spokesman for the latter said.
Not seeking cabinet positions
The spokesman said that the reinstating of judges and removal of constitutional amendments made by Pervez Musharraf, Pakistan's president, would be a priority for the coalition.
However, the PPP may not insist on the reinstatement of the judges, having previously said that parliament should rule on the issue.
It has also not ruled out working with Musharraf.
Zardari said on Wednesday that he would welcome the small pro-Musharraf Muttahida Qaumi Movement joining a coalition government.
Speaking at a news conference in Islamabad, he said: "I want to make a government along with the MQM."
A new government is expected to be formed by mid-March but it already faces considerable challenges, such as inflation and continued fighting with tribal pro-Taliban and al-Qaeda forces.
The government will also have to decide on the fate of Musharraf.
The president could remain in place - with limited powers - if the opposition fails to gather the two-thirds majority needed for his impeachment.
When asked by The Wall Street Journal whether he would resign or retire, Musharraf said: "No, not yet. We have to move forward in a way that we bring about a stable democratic government to Pakistan."
Rashid Qureshi, the president's spokesman, said on Tuesday that Musharraf does not intend to resign, rather he wanted to work with the new government and see out his term, which expires in 2012.
Public support for the president fell after he suspended the constitution and imprisoned members of the judiciary and opposition in 2007.
Sharif, who has already called on the president to resign, said on Wednesday: "I think Musharraf should understand that the situation is out of his control."
Meanwhile, the leader of a dissident group of lawyers said in Lahore that street demonstrations in the capital Islamabad would take place unless judges dismissed by Musharraf last year were reinstated by March 9.
That is the same date that Musharraf cracked down on the judiciary in 2007.
Aitzaz Ahsan, president of the Pakistan supreme court bar association, said: "If parliament thinks they are going to ignore it, the lawyers of Pakistan are not going to ignore it... We will march on Islamabad from all directions."
'No level playing field'
Meanwhile, international monitors have said that the run-up to the Pakistan elections favoured Musharraf's allies but the polling day was basically fair, enabling his critics to win.
"A level playing field was not provided for the campaign," Michael Gahler, chief of the EU monitoring mission, said.
Slanted state media coverage, restrictions on staging public rallies, and the arrest of hundreds of political activists were among the conditions benefiting the ruling party, Gahler said on Wednesday.
"But on election day, voting on the whole was assessed as positive," he said.