March 18 (Bloomberg) -- The Pakistan Peoples Party, holder of the most seats in the new Parliament, named its candidate for speaker today as the coalition that it leads moved to form a government to challenge President Pervez Musharraf.

Fehmida Mirza is set to become the South Asian nation's first female speaker when lawmakers vote tomorrow. PPP leader Asif Ali Zardari, who heads the coalition controlling almost two- thirds of the 342-member National Assembly, will name its candidate for prime minister in the coming days, the party said.

Yesterday's opening of Parliament is a step toward ending Musharraf's dictatorship, Zardari and his main partner, former Prime Minister Nawaz Sharif, told reporters after sitting together at the session. The opposition defeated pro-Musharraf parties at the Feb. 18 ballot.

``Musharraf is facing a serious challenge,'' said Muhammad Waseem, professor of political science at the Lahore University of Management Sciences. ``He has few tools of real power left.''

Four months after Musharraf stepped down as army chief, the military is withdrawing from politics. His successor Ashfaq Parvez Kayani has ordered most of his officers to leave civilian departments and agencies.

Contestants Named

Mirza, a lawmaker from southern Sindh province, will contest against Muhammad Israr Tarin, backed by the pro-Musharraf coalition led by Pakistan Muslim League-Quaid-i-Azam, state-run Pakistan Television reported. Faisal Karim Kundi, who was elected from D.I. Khan in North West Frontier Province and was named as the Pakistan Peoples Party's candidate for deputy speaker, will run against Khush Bakhat Shujaat, the broadcaster said.

The PPP, led by Benazir Bhutto before her assassination in December, is forming a coalition with Sharif's Pakistan Muslim League - Nawaz, the Awami National Party and the Jamiat Ulema-e- Islam, which is led by former head of the opposition parties, Maulana Fazl-ur-Rehman. The four parties combined have about 225 seats, just short of the two-third majority needed to impeach Musharraf.

Musharraf, 64, ousted Sharif, 58, in a military coup in 1999.

Sharif repeated yesterday that the Supreme Court justices, dismissed by Musharraf when he imposed emergency rule Nov. 3, must be reinstated.

The justices and more than 50 other judges were fired as the Supreme Court was due to rule on a challenge to Musharraf's October re-election. If the judges are returned, they will probably be presented with new petitions challenging the president's rule, lawyers and political analysts say.

The reinstatement of the judges will probably be an early political battle, said Waseem.

Political Stability

The new government may agree to cooperate with Musharraf to ensure political stability, Waseem said. This may involve an agreement that the judges, once restored to office, will abstain from cases involving him.

The PPP should toughen its stance toward Musharraf on the judges, Sharif said when his Muslim League faction agreed on March 9 to form a coalition.

``No one has to repeat this demand, which we have already pledged to implement,'' Zardari, 51, said yesterday, according to the official Associated Press of Pakistan.

The president's aides say his emergency decrees can only be revoked by a two-thirds majority in the National Assembly and in the Senate, where Musharraf's allies hold enough seats to block such a move.

The coalition parties say they can restore the judges by issuing new orders to the Justice Ministry and police. If the president tries to countermand such an order, police and bureaucrats will ignore him, according to Ahsan Iqbal, a spokesman for Sharif's party.

``The mood is changing in the ministries,'' where officials are slowing or stopping implementation of Musharraf's directives in expectation of the new government, Iqbal said.

To contact the reporters on this story: James Rupert in Islamabad at jrupert3@bloomberg.net; Khalid Qayum in Islamabad at kqayum@bloomberg.net.

Last Updated: March 18, 2008 07:36 EDT