He is being challenged by Chaudhry Pervez Elahi, a senior leader of the main pro-Musharraf Pakistan Muslim League (PML) party, which came third in the February 18 general election.
Qamar Syed Naveed, a senior PPP official, said: "We hope to win with a big margin. He's almost a consensus candidate because except for the PML-Q, all other parties are supporting Mr Gilani."
The Zardari factor
There had been speculation that the PPP would nominate a stop-gap prime minister and Asif Ali Zardari, Bhutto's widower, who now leads the party would take over the post after entering parliament via a by-election.
But the News
, a Pakistani daily, on Monday cited Zardari as rejecting such speculation and saying that Gilani would be prime minister for a full five-year term.
Gilani was jailed in 2001 by the Musharraf government for making illegal appointments but was freed in 2006.
He said the charge was politically motivated.
While in prison, Gilani wrote a book that advocated a strong military, but one that was removed from politics.
He has called for the repeal of constitutional changes made by Musharraf to bolster his authority, including the power to dismiss a government.
For his part, Musharraf has promised full support to the incoming government.
"My brothers and sisters, you are seeing that a real democratic era has begun in Pakistan," he said while addressing the Pakistan Day military parade in Islamabad, the capital, on Sunday.
"Which ever new government is formed, it will enjoy my full support."
Musharraf had previously implored the new government to avoid confrontation.