ISLAMABAD, Pakistan (CNN) -- Pakistani President Pervez Musharraf announced Thursday that he will end a state of emergency on December 16 ahead of upcoming elections -- a key demand by the United States and opposition leaders.
Musharraf made the announcement shortly after taking an oath of office for a third time as president, a day after abandoning his position as military chief.
"At the moment, the dust is settling down and everything is in control," Musharraf said. "The election will take place according to constitution on the eighth of January."
He called on all opposition parties to "follow the rules ... and all the directives of the election commission."
The president had previously insisted that the state of emergency, imposed on November 3, must remain until the January 8 vote was completed, saying it was needed to ward off attacks from Islamic extremists.
White House spokeswoman Dana Perino said Washington welcomed the move. "We look to the candidates and the people of Pakistan to fully participate in these free and fair elections," she said.
Perino urged Pakistan's government to ensure that citizens "be able to voice their opinions, that they be able to assemble, and that they be able to have the freedom of the press that they had before the emergency order was in place."
Earlier, Musharraf declared his new term as a civilian leader "a milestone in the transition of Pakistan to the complete essence of democracy."
"There has been great turbulence. We have never had a dull moment," he said. "We will succeed, and we will come out of this and lead Pakistan on the path that we are already following." Watch as Musharraf describes the "turbulence" of the last few months »
Opposition leaders had threatened a boycott to the upcoming elections to protest Musharraf's emergency order, arguing it has been used by him to consolidate power.
Musharraf's exit from the military as its leader on Wednesday capped a 46-year career in the nation's armed forces and ended eight years of military rule.
He defended his decision to declare emergency rule, calling it "extraordinary," but necessary.
"This derailment of this democratic process ... never on one occasion did I ever waiver from the path that we need to follow for this democratic transition," he said. "I feel this derailment could have led the nation into chaos."
In his acceptance speech, Musharraf praised his chosen successor as military chief, Gen. Ashfaq Kiyani, who recently stepped down as head of Pakistan's Inter Services Intelligence agency.
"Gen. Kiyani ... will lead the army as well if not better than what I did," Musharraf said. "I have full faith and trust in him."
It was as Pakistan's army chief that Musharraf led the 1999 bloodless coup that overthrew his predecessor, former Prime Minister Nawaz Sharif.
Sharif returned to Pakistan Sunday, ending seven years of exile in Saudi Arabia and succeeding after a failed attempt in September.
Sharif wants to keep all options open, including a possible run for the prime minister post.
He will meet with other opposition party leaders in the coming days to discuss forming a unified front against Musharraf's emergency rule. E-mail to a friend