Late on Sunday, there was mounting speculation that the government would capitulate and reinstate the chief justice sacked by Pervez Musharraf, the former president, a key demand of the protesters.
"The prime minister is most likely to announce the reinstatement of the deposed chief justice," a senior official told the AFP news agency on condition of anonymity.
Yusuf Reza Gilani, the prime minister, is due to address the nation on Monday after reportedly holding talks with Asif Ali Zardari, the president, and Ashfaq Kayani, the army chief of staff.
Thousands of well-wishers cheered Sharif, the leader of the Pakistan Muslim League-Nawaz (PML-N), as his convoy of about 200 buses, cars, lorries and motorbikes crossed the main bridge out of Lahore.
"He is going to stop overnight at various towns and villages and he is going to rally support," Al Jazeera's Imran Khan, reporting from Lahore, said.
"The idea being that so many people will join him on this rally that the government will have no choice but to let them go to the parliament."
Sharif was placed under house arrest after vowing to join the anti-government "long march" by lawyers and opposition activists pushing for the restoration of the judges deposed in November 2007.
Zardari has repeatedly refused to honour pledges to reinstate the members of the supreme court.
The protesters plan to stage a sit-in at parliament in Islambad on Monday. The government has, however, refused permission for the demonstration and put the army on alert.
Earlier riot police had used tear gas as they fought with stone-throwing protesters in Lahore.Lahore 'battleground'
Witnesses said that more than one dozen people were wounded in the clashes outside the city's high court.
"The main GPO Square looked like a battleground. I saw at least two ambulances ferrying casualties to the hospital," Hanif Goraya, who was injured in the violence, said.
Political tensions have risen in Pakistan in recent weeks, with Zardari coming under mounting pressure since the supreme court banned Sharif and his brother, Shahbaz, from holding elected office.
"Zardari finds himself in a very difficult position, his ratings are at an all time low, so I think having seen the public anger ... he will probably have to come to some sort of agreement with Nawaz Sharif," Tariq Azeem Khan, a senator from the Pakistan Muslim League-Quaid (PML-Q) party, said.
The government vowed on Saturday to review last month's supreme court ruling, but PML-N officials dismissed the government's announcement and said that their "long march" would continue.