Prime Minister Shaukat Aziz held a final cabinet meeting late Thursday, lauding the current government's progress on such issues as press freedom, Voice of America reported. The government dissolved at midnight. The new government was set to be sworn Friday.
Elections are scheduled for January.
Bhutto, who once held power-sharing talks with Musharraf, now says the general is the main obstacle to restoring democracy, Dawn reported Thursday.
"There is a consensus among all opposition political parties at the moment that the general must step down to pave way for the return of democracy," Bhutto said by telephone from Lahore where she is being detained.
The report said Bhutto has contacted opposition leaders, including Nawaz Sharif, another ex-prime minister living in Saudi Arabia since a 1998 coup. Bhutto reportedly is trying to work out a plan to mount a united front against Musharraf.
Opposition leader Imran Khan was arrested Wednesday on terrorism charges after being detained by Islamist students at Punjab University.
Musharraf suspended the constitution and imposed emergency rule Nov. 3.