A Pakistani cleric announced that a mass sit-in of tens of thousands of people outside parliament in Islamabad would end Thursday, the latest twist in a drama that has gripped the nuclear-armed state.

Tahir-ul Qadri made the announcement as the country's corruption watchdog told the Supreme Court it did not yet have enough evidence to arrest Prime Minister Raja Pervez Ashraf on graft allegations, as the top judge had ordered.

Tension in Pakistan has been at fever pitch since Tuesday, when the arrest order coincided with Qadri's arrival in Islamabad, delivering a fiery speech denouncing politicians and praising the armed forces and judiciary.

The timing sparked panic about a rumoured judiciary-military plot to derail elections due by mid-May. The polls, if successful, would be the first democratic transition of power between two civilian governments in Pakistan's history.

The political crisis comes as Pakistan battles problems on numerous fronts: the economy is struggling, Taliban and other violence is at a high, the rupee is sinking, there is an appalling energy crisis and fledgling peace gains with India appear in jeopardy following five cross-border killings in a week.

Qadri gave the government 90 minutes to negotiate and later told his supporters that talks would begin at 3:45 pm (1045 GMT).

Information Minister Qamar Zaman Kaira said a delegation of government and coalition partners had been sent to meet Qadri to try to resolve the situation.

Deputy information minister Samsam Bukhari had told private TV station Geo the government was open to talks.

"A high-level delegation comprising all coalition partners is coming here to have talks with me in my container," Qadri told the crowd, referring to the bullet-proof box with windows that he has not left since early Tuesday.

His supporters broke into cheers and danced in the street. They have braved cold weather and heavy rain to camp out on Islamabad's main commercial avenue since streaming into the capital overnight Monday-Tuesday.

"You keep sitting here until the dialogue succeeds, a formal agreement is written and it is announced. Don't move until then," Qadri said.

"Congratulations. The voice of the people has been heard. We will leave here after victory."

Most were shivering with cold. Some were drying their clothes after the rain stopped and sun started to shine through the clouds, an AFP reporter said.

Qadri wants parliament dissolved immediately and a caretaker government set up in consultation with the military and judiciary to implement reforms before free elections can be held.

The government has so far stuck to its position that parliament will disband in mid-March to make way for a caretaker government, set up in consultation with political parties, and elections within 60 days -- sometime by mid-May.

Qadri announced that Thursday would be the last day of the sit-in. "Tomorrow there will be no sit-in. We have to end it today," he added.

His sudden -- and apparently well-financed -- emergence after years living in Canada has been criticised as a ploy by sections of the establishment, particularly the armed forces, to delay the elections and regain power.

The military has remained silent during the protest and President Asif Ali Zardari has spent the duration in Karachi, Pakistan's financial capital.

In the Supreme Court the chairman of the National Accountability Bureau, Fasih Bokhari, told Chief Justice Iftikhar Muhammad Chaudhry that investigations into a power projects graft case were not complete.

He said it took time to find evidence to prosecute those allegedly involved.

Chaudhry -- who Tuesday ordered the prime minister's arrest -- ordered Bokhari to report back with the case files so that the court could itself point out evidence that could form the basis for a prosecution.

The court in March 2012 had ordered legal proceedings against Ashraf, who was water and power minister when the power projects were set up.