Musharraf faces challenges from militant Islamists over the recent assault on the Red Mosque in Islamabad, and from the middle class for his attempt to remove the country's chief judge. Bhutto has been living outside the country since 1999 and faces criminal charges if she returns.
Sheikh Rashid, the federal minister, said the two met in the United Arab Emirates, The Washington Post reported.
"The country is in a serious crisis," Rashid told the Dawn News television station in Pakistan. "So we have to move fast, and we have to move to national consensus."
It is unclear whether a Musharraf-Bhutto government would stabilize the country. An alliance with Musharraf could cost Bhutto many of her allies, like the Pakistan Muslim League, headed by another exiled former prime minister, Nawaz Sharif.
"She has betrayed the cause of democracy," said Ahsan Iqbal, a spokesman for the league. "Musharraf has lost all legitimacy, and he must resign."