President Pervez Musharraf swore in a loyalist of slain ex-leader Benazir Bhutto as prime minister Tuesday, while American envoys held talks with Pakistan's new leaders.

Yousaf Raza Gilani, who will front a new government vowing to cut back the U.S.-backed president's powers, took the oath from Musharraf at a stiff ceremony in Islamabad.

Seated side-by-side on a raised dais and flanked by two honor guards with white and gold-braided uniform, Gilani followed the former army strongman's lead in reading the oath of office.

Members of Gilani's party chanted "Long Live Bhutto!" after the formalities were complete.

Musharraf betrayed no emotion during the ceremony but gave Gilani a firm handshake and chatted amiably with him as they headed for refreshments in the presidential palace.

Parliament elected Gilani as premier on Monday, five weeks after the opposition swept parliamentary elections supposed to return Pakistan to democracy after eight years of military rule under Musharraf.

In a move that heralds a showdown with the former army strongman, Gilani immediately prompted authorities to release senior judges ousted and put under house arrest when Musharraf imposed emergency rule last year.

On Tuesday, a steady stream of well-wishers, many carrying bouquets of flowers, came to pay respects to the house of deposed Chief Justice Iftikhar Mohammed Chaudhry.

"He's feeling grateful to God and the people of Pakistan and the lawyers of Pakistan," said Aitzaz Ahsan, a senior lawyer who has led protests against the crackdown on the judiciary.

Chaudhry greeted cheering crowds from his balcony on Monday evening.

He will not venture out Tuesday, but plans to address bar associations around the country, Ahsan said.

The new government will include the party of former Prime Minister Nawaz Sharif, who was ousted when Musharraf first seized power in a military coup in 1999.

The coalition partners have vowed to shift power from the presidency to parliament and review Musharraf's counterterrorism policies. Many Pakistanis resent his support of Washington's aggressive campaign against Al Qaeda and the Taliban, claiming it has stoked a bloody backlash by extremists.

U.S. Deputy Secretary of State John Negroponte and Assistant Secretary of State for South Asia Richard Boucher arrived in Islamabad early Tuesday and held talks with Sharif just as the new premier was being sworn in and then visited Musharraf at the presidential palace.

The U.S. Embassy declined to say who else the envoys would meet.

Zaffar Abbas, an editor with Dawn newspaper, said the visit was badly timed.

Their presence on the day when the new prime minister was inducted would signal to both Islamic extremists and moderates that "here are the Americans, right here in Islamabad, meeting with senior politicians in the new government, trying to dictate terms," Abbas said.

"The problem with the Americans is they don't understand the domestic pressure on the new government," Abbas said. "People are expecting this government to explore other possibilities for a solution to what's happening in the tribal areas."

The Bush administration has been a staunch supporter of Musharraf, who has deployed troops along the Afghan border and helped kill or capture a string of Al Qaeda leaders. But in recent weeks Washington has started to put some discreet distance between itself and a once "indispensable" ally in the war on terror.

The new civilian rulers have said they would negotiate with some militant groups, rather than rely on military force.

White House spokeswoman Dana Perino on Monday congratulated Gilani and the Pakistani people "for moving quickly to form a new government" and said the United States looked forward to partnering with it.

However, Washington has voiced no support for the incoming government's promise to restore the ousted judges — a move which would make it very hard for Musharraf to continue in office.