By NBC News' Carol Grisanti and Fakhar Rehman in Islamabad

The Pakistan government bowed to the will of the people on Monday and agreed to reinstate the deposed chief justice of the Supreme Court, Iftikhar Mohammed Chaudhry, two years after he was dismissed by President Pervez Musharraf.

As news of the deal leaked out in Islamabad, the capital, jubliant crowds rushed to the popular Chaudhry's house clapping, cheering and chanting slogans of victory in what has come to symbolize the peoples' struggle for the rule of law in the country.

Tens of thousands of demonstrators joined lawyers, civil rights activists and party members of opposition leader, Nawaz Sharif at a rally in the eastern city of Lahore on Sunday, determined to march to Islamabad and stage an indefinite sit-in until Chaudhry was restored.

Rahat Dar / EPA

Flames rise from a police bus that was set on fire Sunday by demonstrators in Lahore, Pakistan, during a rally calling for the restoration of deposed Chief Justice Iftikhar Muhammad Chaudhry.

The rally had briefly turned violent as police fired tear gas and used batons on the crowds but as their numbers swelled, the police pulled back to allow the procession to proceed.  The pictures of anti-government protesters clashing with police, broadcast continually on 24-hour news channels, has raised alarm in the United States about the stability of a nuclear-armed Pakistan, already under threat from a growing internal Islamic insurgency.

Sharif, who had been put under house arrest at his Lahore home to prevent him from joining the march, challenged the arrest order and came out to lead the procession. The Lahore police had defied the orders from the government in Islamabad to thwart the march.

"No one can stop us now," said Athar Minallah, a Supreme Court lawyer and spokesman for Pakistan's deposed Chief Justice, Iftikhar Mohammed Chaudhry, who was dismissed by President Musharraf in 2007. "We have succeeded and now the ultimate goal is the supremacy of the constitution and the independence of the judiciary."

In 2007, President Pervez Musharraf, in a bid to remain in power, dismissed Chaudhry along with 60 judges who were intent on disqualifying him from seeking another term in office. The deposed chief justice became a rallying cry for Sharif - he used Chaudhry to stir emotions and gain street power which gave him enough political capital to extract a promise from Pakistan president Asif Zardari to restore Chaudhry to the bench. Zardari then broke that promise.

Opponents say Zardari feared Chaudhry would roll back an amnesty granted by President Musharraf, which was brokered by the United States and Britain, to re-open the corruption cases against him. All the corruption charges against Zardari and his wife, Benazir Bhutto, were dropped so they could return to Pakistan. Bhutto was later assassinated in December 2007. Chaudhry is on record in the Supreme Court as opposing that amnesty.

But the lawyers "long march" to Islamabad had turned into a political showdown between President Asif Ali Zardari and his main opposition rival, Nawaz Sharif, provoking a crisis that had paralyzed the government and grabbed the attention of most Pakistanis.

A former prime minister and Pakistan's most popular politician, Sharif had thrown his weight behind the lawyers' movement and called on the nation to join him in the march promising that it would break the status quo in the country and lay down the foundation for change.

K.M. Chaudary / AP Former Pakistani Prime Minister Nawaz Sharif waves from inside his car during Sunday's anti-government demonstration in Lahore.

In response, Zardari's government banned rallies and arrested hundreds of lawyers, civil rights activists and opposition leaders ahead of Monday's sit-in at parliament to try to thwart the event.  Specifically, a ban was placed on any group of more than four people trying to assemble on the streets. Sharif has called the restriction illegal and told a local TV channel "the march was a prelude to a revolution."

"You have seen that the entire country has been turned into a police state," Sharif told reporters Sunday, in front of his Lahore home. "They have blocked all the roads, they have used all sorts of unlawful tactics.

Dr. Israr Shah, a senior member of  Zardari's party, known as the PPP or Pakistan Peoples Party, lost both his legs in a suicide attack when he attended a rally supporting the deposed chief justice early last year. Shah feels the present political controversy is aimed more at destabilizing Zardari's government than championing an independent judiciary.

"This entire issue can and should be resolved in Parliament not by long marches on the roads," he said. "Certain political parties are just trying to promote their own agenda and they have ulterior motives, which are not in the best interests of Pakistan."

Watching the chaos from behind the scenes is Pakistan's powerful army chief, General Ashfaq Kayani. He tried to broker a deal between the warring politicians but the deal faltered over Zardari's reluctance to bring back Chaudhry.  Pakistan watchers and analysts fear that the present political-judicial crisis will cause irreparable damage to Pakistan's nascent democracy and lead to yet another take over by the army. The army has ruled Pakistan for more than half of its 61-year history.

"The concerned authorities are extremely interested that matters be settled quickly and amicably," said Sheikh Rashid Ahmad, a former federal minister and president of the Awami Muslim League, a political party. Rashid was referring to the behind the scenes involvement of the Pakistan army.  "In my opinion, though, the time has run out for Asif Zardari," he said.