(Edits, adds British statement on aid)

By Kamran Haider and Augustine Anthony

ISLAMABAD, Nov 5 (Reuters) - Pakistan said on Monday it would hold a national election by mid-January and President Pervez Musharraf pledged to quit the military after criticism from the United States for imposing emergency rule.

Musharraf has detained hundreds of lawyers and opposition politicians after taking emergency powers on Saturday, a move seen as designed to pre-empt a Supreme Court ruling on his re-election as president last month. U.S. President George W. Bush, who values Musharraf as an ally in his battle against al Qaeda and the Taliban, called for a quick return to civilian rule and the release of detainees.

Police used teargas against stone-throwing lawyers in the eastern city of Lahore, and wielded batons to break up another protest by dozens outside the High Court in Karachi.

It had been unclear whether parliamentary elections scheduled for January would go ahead, but Attorney General Malik Abdul Qayyum told Reuters:

"It has been decided there would be no delay in the election and by November 15, these assemblies (national and provincial) will be dissolved and elections will be held within the next 60 days."

There was no indication of when Musharraf would lift emergency rule, which he justified by citing a hostile judiciary and rising militancy. However he said on Monday he planned to give up his military role in nuclear-armed Pakistan.

"I am determined to execute this third stage of transition fully and I'm determined to remove my uniform once we correct these pillars in judiciary and the executive and the parliament," he said on state-run Pakistan Television.

Musharraf, who seized power in 1999 and had been waiting for the Supreme Court to decide if his re-election as president while still army chief was valid, had to dismiss rumours sweeping the country that he had been put under house arrest.

"WE WANT A FREE ELECTION"

Since Pakistan was formed in 1947 by the partition of India after British colonial rule, it has reeled from one crisis to another and spent half its 60 years ruled by generals.

Prime Minister Shaukat Aziz said cases before the Supreme Court, including challenges to Musharraf's re-election, had to be concluded before a parliamentary election that is supposed to transform Pakistan into a civilian-led democracy.

"We don't want to disrupt the election process. We want a free election," he told a news conference.

Security has deteriorated since July, when commandos stormed Islamabad's Red Mosque to crush an armed Islamist movement. Since then nearly 800 people have been killed in militant-linked violence, half of them by suicide attacks.

The United States has put future aid to Pakistan under review, having provided $10 billion in the past five years, and postponed defence talks with Pakistan due this week.

However, Britain said it was not planning to cut off development aid.

LAWYERS PROTEST

Several hundred lawyers, chanting "Go Musharraf Go!" and "The dictator is unacceptable!", protested outside the lower courts in Islamabad until police broke them up by force.

"We are not scared of these arrests. We will continue our fight, come what may," Karachi lawyer Abdul Hafeez, one of hundreds of lawyers arrested on Monday, said as police bundled him into a car.

Several judges were held incommunicado at their homes after refusing to back emergency rule.

Among them was dismissed chief justice Iftikhar Chaudhry, who became a symbol of resistance to Musharraf's rule after defying pressure to quit in March.

"It is the duty of all citizens of the country and lawyers in particular to continue their struggle for the supremacy of the constitution, rule of law, independence of judiciary and real democracy," Chaudhry said in a statement.

There have also been mass detentions of political activists.

Pakistani shares fell 4.6 percent, compounding losses incurred last week on talk of impending emergency rule. (Additional reporting by Sahar Ahmed, Ovais Subhani in Karachi, Zeeshan Haider, Kamran Haider and Sheree Sardar in Islamabad)

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