Last ditch efforts are on to secure a «safe passage» and indemnity for Pervez Musharraf with US and British diplomats pressing the government not to impeach the President as it will further harm crisis-racked Pakistan.

However, several preconditions put forth by Musharraf with army?s backing including his demand that he be allowed to stay in the country were dragging the behind the scene negotiations and delaying the announcement of his resignation, sources told the Pakistani newspaper Daily Times.

There was speculation that the 65-year-old former General would announce his decision to bow out during a speech yesterday, but Musharraf refused to reveal his cards and instead harped on political reconciliation.

«There is an understanding be-tween the Pakistan People?s Party-led coalition and Musharraf on the President resigning before impeachment proceedings begin in earnest against him,» the Times said.

However, Musharraf is refusing to take «safe passage» to mean going into exile outside the country immediately after his resignation.

He is insisting on two conditions ? that he will be entitled to stay in his house at Chak Shahzad on the outskirts of Islamabad and be provided full security and privileges as allowed under law to all ex-presidents.

He is also demanding that the «cast-iron guarantees of indemnity» will be provided from any action against him following his resignation, preferably through an act of Parliament, the sources said.

British and US diplomats have, meanwhile, covertly come to Musharraf?s rescue seeking a «graceful exit» for him, British daily The Guardian reported.

Pervez Musharraf, under mounting pressure to resign, called yesterday for reconciliation to tackle economic problems and Islamist militancy. Musharraf, speaking in a televised Independence Day address, did not refer to the plan to impeach him drawn up by a coalition government led by the party of assassinated former Prime Minister Benazir Bhutto. In his first public comments since the coalition announced its impeachment plan last week, the former army chief and firm US ally also did not refer to the calls for him to step down.

«If we want to put our economy on the right track and fight terrorism then we need political stability. Unless we bring political stability, I think we can?t fight them properly,» Musharraf said. Musharraf has been at the centre of a political crisis since last year that has heightened concerns in the United States and among its allies about the stability of Pakistan, a nuclear-armed Muslim state that is also a hiding place for al-Qaida leaders.

Musharraf seized power in a 1999 coup but has been isolated since his allies lost a February election. Speculation has been rife that he would quit rather than face impeachment, though his spokesman has denied that. The uncertainty is unnerving investors, with the rupee setting a new low of around 75.05/15 to the dollar on Wednesday and stocks hovering near two-year lows. Referring to the rupee, Musharraf said the flight of capital out of the country had to be stopped. Financial markets were closed yesterday.