ISLAMABAD, Pakistan — Embattled President Musharraf hailed the start of a “new era of real democracy” in Pakistan and vowed today to support an incoming government led by foes bent on diminishing his powers.

“The journey toward democracy and development we started eight years ago is now reaching its destination,” said the former army strongman, who seized power in a 1999 coup. “A new era of real democracy has begun.”

The American-backed leader was speaking at a military parade celebrating Pakistan’s national day. Flatbed trucks rolled past his viewing stand displaying pieces of Pakistan’s nuclear-armed arsenal: camouflage-painted Shaheen missiles about 40 feet long.

Military helicopters swooped past Mr. Musharraf flying huge Pakistani flags and spewing decorative, multicolored smoke. Fighter jets flew overhead in formation of a heart.

Mr. Musharraf quit the military in November but retains sweeping presidential powers to fire parliament and the prime minister. The parties who defeated his allies in the recent elections are hoping to strip away some of his powers, as well as reverse his decision to purge the courts and review his American-backed terrorism policies.

“I hope the new government can maintain peace and the fast pace of socio-economic development in Pakistan,” Mr. Musharraf said today. “And I hope it will also continue our struggle against the curse of terrorism and extremism with the same force.”

On Saturday, the party of slain opposition leader Benazir Bhutto named a former parliament speaker, Yousaf Raza Gilani, as its candidate for the country’s next prime minister, after routing Mr. Musharraf’s allies to win the most seats in last month’s polls.

Bhutto’s Pakistan People’s Party is forming a majority coalition with the party of the prime minister ousted in Musharraf’s coup, Nawaz Sharif, which came in second in the elections. Neither group took enough votes to govern alone.

The new administration faces massive challenges, including a wave of Islamic militancy, high inflation, and electricity shortages. And a confrontation still looms between Messrs. Musharraf and Sharif, who has been one of the most vocal in calling for the unpopular president’s resignation or impeachment.

Asked today whether he would work with Mr. Musharraf or try to dislodge him, Mr. Gilani said, “I will follow the constitution.”

“The crisis our country is passing through is grave,” Mr. Gilani told reporters after filing his nomination papers. “All political forces have to work together.”

Mr. Gilani was a close aide to Bhutto and spent four years in jail on allegations he abused his authority as speaker during Bhutto’s second term as prime minister in the 1990s. His convictions were overturned and he was freed in 2005. A party spokesman, Farhatullah Babar, announced the nomination at a news conference last night in the capital, Islamabad.

“Yousaf Raza Gilani is not afraid to lead and he knows the way,” Mr. Babar said, reading a statement from Bhutto’s widower, Asif Ali Zardari.

The naming of a candidate for premier was stalled for weeks, fueling speculation that Mr. Zardari wanted the job for himself. He now shares control of the party with his and Bhutto’s 19-year-old son.

Mr. Zardari, however, cannot become premier because he did not run for a parliamentary seat. But he could contest a by-election and win a seat to qualify as early as this summer. In that case, Mr. Gilani would be a stand-in until Mr. Zardari could run.

A confirmation vote was scheduled for tomorrow in parliament, and the prime minister would be sworn in by Mr. Musharraf a day later.

Meanwhile, the outgoing ruling party named a close Musharraf ally, Chaudhry Pervez Elahi, as its nominee today, but the move was largely symbolic because the president’s loyalists do not have enough votes to block Mr. Gilani from the job.

“We want to show that despite losing or winning, we are taking part in this democratic process,” Mr. Elahi told reporters.

The choice of Mr. Gilani came as a clear snub to a PPP vice chair, Makhdoom Amin Fahim, who was long presumed the front-runner after leading Bhutto’s party during her nearly eight years in exile. Still, Mr. Fahim said he would not quit the party.

“I have the best wishes for him,” Mr. Fahim said just after Mr. Gilani’s name was announced.

Bhutto returned to Pakistan last year only to be assassinated in a suicide attack in December. Since then, Mr. Zardari has risen to become a key figure in Pakistan’s politics, and he may have considered Mr. Fahim a threat to his own political ambitions.

Bhutto’s son, Bilawal Bhutto Zardari, was appointed party chairman after his mother died, but his father is running things while the 19-year-old continues his studies at Oxford University.