Black-suited Pakistani lawyers cheered and threw rose petals as Supreme Court Chief Justice Iftikhar Chaudhry returned to work on Tuesday more than a year after he was sacked by a military ruler.

The government decided to reinstate Chaudhry on March 16, defusing a political crisis that had threatened to bring violent confrontation to the streets of the capital.

"Welcome, welcome!" scores of lawyers chanted as Chaudhry arrived at the Supreme Court in the heart of Islamabad.

Chaudhry, a maverick who as head of the Supreme Court trod on many toes in the establishment, later urged lawyers packed into his court to root out corruption in the judiciary.

"There is rampant corruption in this institution ... you people should point out such cases," he said.

Chaudhry's reinstatement ended a protest campaign by anti-government lawyers and opposition parties but tension has lingered between the country's two biggest parties: the Pakistan People's Party (PPP) of President Asif Ali Zardari and the party of former prime minister and opposition leader Nawaz Sharif.

However, all sides have spoken of reconciliation, raising hope for political stability in a country grappling with Islamist militant violence and a flagging economy.

The United States and its Western allies see Pakistani action to root out al Qaeda and Taliban enclaves on its northwestern border as essential in stabilising neighbouring Afghanistan.

Then president and army chief General Pervez Musharraf dismissed Chaudhry in November 2007 out of fear that the judge would block his re-election as president while still army chief.

The outrage many Pakistanis felt over Musharraf's treatment of the judge led to the heavy defeat of the main pro-Musharraf party in a general election in February last year.

Despite promises to reinstate Chaudhry and other judges Musharraf dismissed, Zardari dragged his feet. Zardari replaced Musharraf after he was forced to step down last August.

Analysts say Zardari, widower of assassinated former prime minister Benazir Bhutto, feared a reinstated Chaudhry could nullify an amnesty that Musharraf granted Bhutto and Zardari to enable them to return to Pakistan without fear of prosecution for old charges of corruption.

Zardari finally relented and agreed to reinstate the judge in the face of the unrelenting protests and looming turmoil. The United States and army chief General Ashfaq Kayani were involved in negotiations to defuse the crisis.

Potentially divisive issues remain between the two big parties including the question of Sharif's eligibility for elected office and who controls Punjab, Pakistan's most populous, prosperous and  politically influential province.

The Supreme Court ruled on Feb 25 that Sharif and his politician brother, Shahbaz, were ineligible to hold elected office. The ruling nullified a by-election victory by Shahbaz Sharif and disqualified him from being chief minister of Punjab.

The Sharif party's government was thrown out of power in the province and Zardari imposed central rule there for two months.

Zardari called for national reconciliation on Monday, a day after he sent a message of reconciliation to Sharif through his prime minister, Yousaf Raza Gilani.

Sharif welcomed the call and said he was ready to work with Zardari. "We will serve the nation more when our own party comes into power, but before that we are announcing cooperation with the People's Party to change the destiny of the nation," Sharif told his supporters in the eastern city of Lahore late on Monday. -Reuters