The orders ending their detention came just hours before President Pervez Musharraf was to swear in a caretaker government to steer this nuclear-armed nation to elections.
He named senate chairman and close ally Mohammedmian Soomro, a 57-year-old former banker, as interim prime minister.
Soomro and the rest of his cabinet were to take their oath of office at a presidential palace ceremony later in the morning, after parliament dissolved at midnight.
Military ruler Musharraf hailed the handover as evidence of "a new culture of smooth transition, which is as it should be in civilised societies.
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He has promised general elections by January 9, but opposition leaders are considering a boycott and there is growing international anger at his refusal to end the state of emergency he imposed on November 3.
Authorities overnight withdrew a seven-day detention order on Bhutto, a top provincial government official told AFP earlier.
She had been detained behind barbed wire and wooden b