Main opposition leader Nawaz Sharif welcomed what he called an historic achievement and promptly called off a mass protest march that had been due to descend on the capital on Monday, averting widespread fears of unrest.

Prime Minister Yousuf Raza Gilani's climbdown, in a dawn address to the nation, followed overnight talks with President Asif Ali Zardari and the army chief determined to avert chaos in the central front in the 'war on terror'.

'I announce today that Iftikhar Chaudhry and all other deposed judges will be reinstated from March 21,' when the current chief justice retires, he said.

Mr Zardari has come under massive Western pressure to defuse a standoff with Mr Sharif, who urged the masses to rise up against the government to demand that judges sacked under emergency rule be reinstated.

'It is a historic day, a great day which will change the country's destiny,' said Mr Sharif from inside his car in the central city of Gujranwala, were he was showered with rose petals and mobbed by a sea of jubilant supporters.

'We are now calling off this long march,' he said, following discussions with lawyers and political allies including cricket hero Imran Khan.

Mr Gilani also overturned a repressive government clampdown designed to foil the protest march, ordering authorities to release all those arrested and declaring the immediate lifting of a ban on public demonstrations.

'I want to congratulate the nation. Let us celebrate this with dignity,' he said in an apparent plea for peaceful celebrations, one day after protests saw the worst street violence since the crisis unfolded nearly three weeks ago.

Later on Monday, Mr Chaudhry emerged from his home to appear in public for the first time since the announcement, beaming and waving at the crowds of supporters as two years' frustration ended in jubilation.

He smiled as lawyers flashed victory signs, but did not speak publicly. -- AFP

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