"We will not try to bring the government down. But of course then we have no choice but to sit in the opposition."
PPP MPs declared their backing for Asif Ali Zardari, Bhutto's widower, to replace Musharraf as president of the nuclear-armed Islamic republic at a meeting last Wednesday.
Musharraf stepped down on Monday in the face of coalition threats to impeach him over constitutional violations, including his dismissal of dozens of senior judges in order to push through his re-election in November.
The issue of the judiciary has been contentious for the coalition, which won elections in February, since it reneged on an agreement in May to reinstate nearly 60 high court and supreme court judges including Iftikhar Muhammad Chaudhry, the chief justice.
|MPs backed Zardari to replace Musharrraf [EPA]
Sharif, who was removed from power by Musharraf in 1999, said that Zardari had talked about restoring judges but not the independent-minded Chaudhry - something the Pakistan People's Party has denied.
"He has been saying to me 'reinstating the judges minus one'. The 'one' being the chief justice. We have said it's not a question of any individual. It's a question of the institution," Sharif said.
He said Zardari had assured him that the judges would be restored within 24 hours of removing Musharraf.
"If they are not restored, it will be a bad day for democracy. It means whatever the dictator did to our country, we aren't rectifying [it]," Sharif said.
Ahsan Iqbal, the education minister and a key member of Sharif's Pakistan Muslim League-N (PML-N), said that the PPP had to make a decision by Friday.
"If this agreement is not fulfilled, then how can we justify our stay in the coalition?" Iqbal told the AFP news agency.
Sharif pulled his ministers from the cabinet in May when the coalition failed for a second time to meet a deadline to reinstate the judges.
Four ministers returned after the agreement to impeach Musharraf.
Legislators from Bhutto's party have asked Zardari to run for president, voicing their support at a dinner he hosted on Wednesday at his Islamabad residence, Chaudhry Ahmad Mukhtar, the defence minister, said.
"Members belonging to our party in the parliament asked Asif to become the next president," Mukhtar told AFP.
"He is the most deserving candidate for this post."
It is not clear whether Zardari, who has previously denied having any ambition for the presidency, will choose to run.
Mukhtar said the party's executive committee would make a final decision on its choice of candidate at a meeting on Friday in Islamabad.
Sharif's party said Zardari's name had been proposed without their blessing.
"There was an understanding between the coalition partners that the presidential candidate would be decided by mutual consensus," Iqbal said.
"They have unilaterally floated the name of Mr Zardari - it is their prerogative, but we have not been consulted yet," he added.