WASHINGTON, Aug 5 (Reuters) - Former Pakistan prime minister Benazir Bhutto said on Sunday she could work with the country's president Pervez Musharraf under the right circumstances, furthering speculation that the two opposing figures could forge a power-sharing pact.

"There would need to be a balance between the powers of the presidency and the powers of the parliament," the self-exiled Bhutto said on "CNN's Late Edition" television program.

However Bhutto, leader of the country's largest opposition party, the Pakistan People's Party, said an alliance does carry risk and pointed to "independent surveys" that say two-thirds of Pakistanis are unhappy with Musharraf.

Musharraf's popularity has waned since his failed attempt to oust the country's chief justice, Iftikhar Chaudhry, and amid unrest over deaths in the storming of Islamabad's Red Mosque.

The military leader's government is said to have reached out to Bhutto to bolster Musharraf's prospects in elections expected in December or January. Analysts have said he will have trouble holding onto power without Bhutto's support.

Bhutto said it was not "realistic" to expect that Musharraf could continue to be both president and head of the military.

"When the president of a country also wears a uniform, it blurs the distinction between democracy and military rule," she said. "I think it is very important for General Musharraf to take off the uniform."

Bhutto would not confirm or deny whether she had met with Musharraf. "I would like to just confine myself to saying that there have been contacts between the military regime and the Pakistan People's Party, including myself," she said.

Bhutto said she believed that Pakistan, the United States, NATO and Afghanistan must work together to restore law and order to the "tribal badlands" in Pakistan.

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