By Robert Birsel

ISLAMABAD, Jun 6 (Reuters) The United States wants to see the crisis in Pakistan over government attempts to dismiss the country's top judge settled smoothly, by a court decision acceptable to all, a senior U S official said.

Pakistani army chief and staunch U S anti-terrorism ally President Pervez Musharraf faces the biggest challenge to his authority since he took power in a bloodless coup in 1999, over his suspension of the chief justice three months ago.

The move against the judge outraged lawyers and the opposition and has touched off a broad pro-democracy campaign against Musharraf, as well as an outbreak of the worst political violence in nuclear-armed Pakistan in years.

U S Assistant Secretary of State for South and Central Asia Richard Boucher said in an interview with Pakistan's Dawn News TV the United States was watching closely.

''For us, it needs to be handled smoothly and cleanly as a judicial matter to be decided by judges hearing the case... a decision that everyone respects,'' Boucher said in excerpts from the interview published in the Dawn newspaper today.

''We certainly do not want violence to get out of hand, or this to become big trouble for everyone,'' Boucher said in Washington.

While the crisis is seen to have weakened Musharraf's political position in the run-up to elections, the support of the army and the United States has been firm.

Musharraf has been a major U S ally, particularly since the Sept. 11 attacks when he reversed Afghan policy, helping the United States oust the Taliban, in the process causing considerable anger at home.

Pakistan rounded up and handed over to the United States hundreds of al Qaeda members, including top leaders, although Osama bin Laden is at large, perhaps hiding on Pakistan's border with Afghanistan.

Musharraf has also promoted the warmest relations in decades with Pakistan's old rival India after the nuclear-armed neighbours went to the brink of a fourth war in 2002.

GROWING DOUBTS Nevertheless, doubts have been growing among U S commentators and some politicians about Musharraf's commitment to tackling militancy. Several Washington lawmakers said this week violent intimidation to quell protests threatened U S interests. Despite such criticism, there has been no change in the U S administration's stance.

''We work well with President General Musharraf, I am not apologising for that,'' Boucher said. ''We want to see a democratic Pakistan, heading in the right direction, towards economic growth and towards elections.'' Asked if that meant a democratic Pakistan headed by a military ruler, Boucher said: ''Headed by whosoever the people of Pakistan want.'' Musharraf wants to get re-elected by sitting national and provincial assemblies, perhaps in September, before they are dissolved for general elections.

But he is believed to be reluctant to give up his post of army chief as he is constitutionally required to do this year.

Analysts believe Musharraf's main motive for seeking to replace Chief Justice Iftikhar Chaudhry stemmed from doubts Chaudhry would be supportive in the event of constitutional challenges to the president's re-election plans.

Asked about exiled former prime ministers Benazir Bhutto and Nawaz Sharif being allowed back for the elections, Boucher said the United States was not concerned with individuals but with the transparency of the proceedings, Dawn News said.

Bhutto has had talks on a deal with Musharraf but analysts say prospects have dimmed since the killing of about 40 people in Karachi last month in clashes between pro-government activists and rivals from opposition parties including hers.

REUTERS KN HT1505