Pakistan's president has nominated ruling party veteran and textiles minister Makhdoom Shahabuddin to replace the ousted prime minister, state media reported on Thursday, in an apparent bid for continuity ahead of elections due early next year.

The Supreme Court on Tuesday declared Prime Minister Yusuf Raza Gilani ineligible for office for refusing to re-open corruption cases against President Asif Ali Zardari, triggering a new crisis in nuclear-armed Pakistan.

At the time, a senior aide to Gilani said only parliament could dismiss the prime minister, raising the possibility of a confrontation between the judiciary and government, but by nominating a new man the president has accepted the ruling and backed away from a fight.

Shahabuddin is expected to file his nomination papers on Thursday. The ruling coalition has a comfortable majority in parliament, which meets on Friday in an extraordinary session to elect a new prime minister.

But hours after news of the nomination, two Pakistani television channels reported that an anti-narcotics court issued a non-bailable arrest warrant for Shahabuddin in connection with a case of violated quota limits for the export of ephedrine while he was health minister.

That case allegedly involved Gilani's son, Ali Musa Gilani, who is accused by anti-narcotics investigators of violating the quotas.

The new prime minister will face mounting public frustrations over a staggering range of problems, and a Supreme Court chief justice who prides himself on standing up to Pakistan's most powerful players.

Gilani's removal is likely to heat up the Pakistani political arena, where the civilian leadership, the powerful military and the Supreme Court square off against each other at the expense of a public longing for stability and a stronger economy.

Pakistan's relations with the United States, which provides it with billions of dollars in aid, are at their lowest point in years.

Taliban militants still pose a major security threat, despite numerous army crackdowns. The economy is struggling and analysts predict Pakistan will again have to turn to the International Monetary Fund to keep it afloat.

Chronic power cuts, which triggered violent protests this week, show no signs of easing.

Shahabuddin, who enjoys smooth ties with coalition partners, was seen as a safe bet for the ruling Pakistan People's Party, which is gearing up for a general election due early next year.

But the former deputy finance minister will likely face the same pressures as did Gilani from Supreme Court Chief Justice Iftikhar Chaudhry to reopen old corruption cases against Zardari.

Thousands of corruption cases were thrown out in 2007 by an amnesty law passed under former military president Pervez Musharraf, paving the way for a return to civilian rule.

Two years later, the Supreme Court ruled that agreement illegal, and ordered the re-opening of money laundering cases against Zardari that involved Swiss bank accounts.

Gilani and his government refused to obey the court's order to write to Swiss authorities asking them to look again at those cases, arguing that Zardari had immunity as the head of state. - Reuters