Former military dictator Pervez Musharraf could leave Pakistan as soon as Thursday after a decision by a court paving the way for his release, his lawyer said on Wednesday.

Musharraf's fate has been subject to intense speculation since he became the first former army chief to be arrested this year, breaking an unwritten rule that the top ranks of the military are untouchable, even after they have retired.

"The jail staff present at his house will pack up and leave as soon as they get the orders from the lower court," Ahmed Raza Kasuri, who heads the Musharraf defence team, told Reuters.

"Musharraf can fly to Dubai tomorrow once these legal formalities are completed."

Musharraf, who has been under house arrest in a villa on the outskirts of Islamabad, was army chief when he took power in a 1999 coup. He later became president as well.

He stepped down after the party of assassinated former prime minister Benazir Bhutto won an election in 2008.

He returned to Pakistan in March after nearly four years of self-imposed exile to contest a May 11 general election, but he was disqualified from standing because of pending court cases.

Many observers believe a face-saving reason for his departure, possibly on grounds of ill health, will be found.

The current army chief has also suggested the military is unhappy with how authorities have treated Musharraf.

The May election was won by the party of Nawaz Sharif - the prime minister Musharraf ousted in his coup 14 years ago.

The latest bail was granted in connection with the death of a separatist leader in the southwestern province of Baluchistan.

Musharraf has already been granted bail in two other cases. - Reuters