Pakistan's government averted a potentially destabilising dispute with the judiciary on Wednesday, withdrawing orders from the president appointing two judges that the Supreme Court had opposed.

Prime Minister Yusuf Raza Gilani said the decision to withdraw the order, which Zardari issued on Saturday and the Supreme Court blocked hours later, had dispelled political tension.

Pakistan has a history of disputes between the executive and the judiciary sparking political turmoil.   

Gilani, speaking to reporters after meeting Chief Justice Iftikhar Chaudhry, said the withdrawal of the orders and their replacement with new ones would boost stability.

"This is in the best interests of Pakistan ... and all the political forces in the country and that would strengthen and stabilise the system," Gilani said.

"It is completely over," Gilani said when asked about the political tension.   

The row looked set to become a distraction for the government of the nuclear-armed US ally which is already struggling to fight Islamist militants and to get a sluggish economy on track.

The Supreme Court has said at the weekend that Zardari's orders were apparently a violation of the constitution as the president had not consulted the Supreme Court chief on the appointments.   

Black-suited lawyers took to the streets in major cities across the country on Monday, protesting against the unpopular Zardari, husband of assassinated former prime minister Benazir Bhutto.

Pakistani stocks fell early this week as investors worried about instability. The United States, struggling to stabilise neighbouring Afghanistan, would have been dismayed to see the controversy distracting the government from battling militants on its Afghan border.

Opposition leader Nawaz Sharif, who has been largely supportive of the government, denounced the president on Sunday as "the biggest threat to democracy".

The row came two months after the Supreme Court threw out an amnesty that had protected Zardari, several top aides and thousands of political activists and civil servants, mostly from corruption charges.

Though he is protected by his presidential immunity, he is vulnerable to legal challenges to his 2008 election as president on the grounds that old corruption charges against him made him ineligible. - Reuters