Taseer was allegedly arrested and beaten by police during Sharif's first government in the early 1990s after publishing details of alleged corruption in the administration.

Farooq accused Taseer of using his newspapers in the past for "character assassination" against Sharif and said his party was worried that Taseer could try to obstruct the provincial government.

Sharif's party won most of the seats in Punjab, the country's biggest and richest province, and Sharif's brother is expected to take over as its chief minister next month.

Governors perform mainly ceremonial duties but also have the power to dissolve the provincial assembly in an emergency.

Zardari's party was unapologetic.

Spokesman Farhatullah Babar said governors were appointed by the president in consultation with the prime minister, who hails from Zardari's party.

Babar said his party had "informed" Sharif's party about the move on Wednesday.

Western officials warn that fresh political turmoil could weaken Pakistan's efforts against al-Qaida and Taliban militants operating from Pakistani territory along the Afghan border.

The new government is trying to negotiate peace agreements along the frontier which Washington worries will simply allow militants to focus on mounting attacks in Afghanistan.

Militants have vowed to continue the talks, despite an apparent U.S. missile strike on a border village on Wednesday. The identity of the around one dozen people killed remains unclear.

Concern that the country's growing economic problems face neglect has alarmed international investors and pushed the Pakistani rupee to record lows against the U.S. dollar.

Credit rating agency Standard & Poor's on Thursday downgraded Pakistan's sovereign debt, citing the country's yawning budget and trade deficits and slowing foreign investment.

"The emergence of a stable, cohesive and effective political environment needed to tackle mounting macroeconomic imbalances doesn't seem to be at hand," said Agost Benard, an analyst at Standard and Poor's.

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