ISLAMABAD (AFP) - Pakistan Prime Minister Yousuf Raza Gilani was Monday expected to announce the reinstatement of the country's deposed top judge, caving in to a key opposition demand in a bid to end political turmoil.

The likely announcement was expected in an address to the nation following talks through the night with embattled President Asif Ali Zardari and army chief of staff Ashfaq Kayani on the eve of a mass protest march on the capital.

"The prime minister is most likely to announce the reinstatement of the deposed chief justice," a senior official told AFP on condition of anonymity.

Top members of his Pakistan Muslim League-N (PML-N), which walked out of a coalition government last August over the issue and is the second biggest party in the country, hailed the prospective announcement as a victory.

Former chief justice Iftikhar Muhammad Chaudhry was dismissed by ex-military ruler Pervez Musharraf on November 3, 2007 along with 60 other judges, 53 of whom have since been reinstated.

His dismissal led to a countrywide protest that ultimately forced Musharraf to quit in August 2008 and his full reinstatement would be a significant concession from a government that has reneged on previous pledges to do so.

The stand off between the government and opposition lawyers and activists, who have campaigned for Chaudhry's restoration, has threatened to destabilise further the frontline state in the US-led "war on terror."

Sharif defied house arrest to lead thousands in a banned protest through Lahore on Sunday amid the most violent scenes since the crisis unfolded when the Supreme Court on February 25 banned Sharif from contesting elections.

Protesters dismantled barricades and fought battles with riot police before Sharif's convoy of scores of vehicles streamed out of Lahore vowing to drive to the garrison city of Rawalpindi, then Islamabad to stage a "sit-in."

Aides said Sharif was staying around 80 kilometres (50 miles) outside Lahore where he would listen to Gilani's speech before making any response.

"We have been informed by the prime minister that in his speech he will announce the restoration of chief justice Chaudhry," Chaudhry Nisar, the head of Sharif's party bloc in parliament, told television reporters.

"This is far beyond my expectations," said Shahbaz Sharif, Nawaz Sharif's brother, who lost his job as chief minister in Punjab province last month when the Supreme Court disqualified him from holding public office.

The main spokesman for Sharif's PML-N party, Hasan Iqbal, declared victory. "This is an historical moment in our country. The nation has won through a people's revolution.

"This dream of an independent judiciary has come true," he said.

Lawyers assembled through the night at the Islamabad house of the deposed chief justice Chaudhry, anticipating good news.

His spokesman, Tahir Minallah, told reporters: "it will be victory for the people of Pakistan."

On Sunday riot police wearing body armour baton-charged and fired tear gas in pitched street battles with stone-throwing mobs. Witnesses said more than a dozen people were wounded.

Sharif supporters used cranes to dismantle barricades erected in their path.

"It is an anarchy-like situation," Jaffer Ahmed, director of the Pakistan Study Centre at Karachi University, told AFP. "The government has lost its credentials and its moral support," he said.

Analysts warned that continued violence could see a reluctant military, which has ruled Pakistan for more than half its 62-year existence, intervene.

Zardari's office announced late Saturday it would also file a petition against the Supreme Court decision to disqualify the Sharif brothers from public office.