Former prime minister Benazir Bhutto said on Wednesday talks on a power sharing deal with Pakistani President Pervez Musharraf are "totally stalled," and warned of trouble on the streets.
The exiled former leader also told reporters in London that, with or without a deal, she plans to return to Pakistan later this month after presidential elections on Saturday to "lead the movement for democracy."
But Musharraf refuses to take "tangible steps" toward restoring democracy and defuse a worsening political crisis, she said.
"General Musharraf's political party has undermined the understanding that was being reached, that was very near at the end of last month. But since then it's been totally stalled," she said.
For example, Musharraf refuses to quit the army to continue serving as president, establish a balance of power between the president and prime minister, and implement election reform, she asserted.
Bhutto also dismissed a reported amnesty offer as "disinformation" aimed at distracting attention away from the real issues of organising fair elections.
Finally, Musharraf rejects a full immunity bill for MPs and wants to maintain a ban on prime ministers serving more than two terms, said Bhutto, who has served twice as head of government from 1988-1990 and again from 1993-1996.
"We've done our best to negotiate a peaceful transition toward democracy, and while many promises have been made, the goal posts keep being moved ahead," she added.
She then entered talks with executives of her Pakistan People's Party (PPP) in London to consider following other opposition parties in withdrawing from parliament and leaving Pakistan in a dangerous void.
"I'm afraid we're heading for a situation which could lead to street agitation. I don't want it but unless the regime comes up with a political solution I'm afraid that's where we're heading," she said.
She warned not only of mainstream political instability but of growing Islamist extremism in Pakistan, a country which she acknowledged is a key ally of the United States in the fight against terrorism.
"Our people yearn for stability and security," she said. "We believe Pakistan's stability lies in a democratic order."
Despite the deadlock, Bhutto vowed to arrive back in Pakistan on October 18, as previously planned. "I feel it's very important for me to be back in Pakistan to lead the movement for democracy," she said.
She dismissed suggestions that she might be expelled like Nawaz Sharif, whom Musharraf ousted as prime minister in 1999. Sharif, following his return from exile in London, was deported immediately to Saudi Arabia.
Islamabad said on Tuesday it would drop a raft of corruption charges against Bhutto, thus meeting one of her key conditions for a pact ahead of her return.
Bhutto, though, dismissed the amnesty offer. "It's absolutely wrong," she said, adding: "It's a disinformation campaign run by...the head of the intelligence bureau."
If a power-sharing deal could be struck, it would allow Musharraf to remain as president while ushering in civilian rule eight years after he seized power in a coup.
He has promised to quit the position as head of the nuclear-armed military and become a civilian leader if, as expected, he wins Saturday's vote.
In Islamabad, Musharraf is facing a final legal hurdle to his attempt to win another five-year term in Saturday's presidential vote.
The Supreme Court is hearing last-minute challenges filed by his election rivals, who argue that he is not eligible to stand.