US ally Musharraf, who came to power as a general following a coup in 1999, has cut an increasingly isolated figure since the parties supporting him were defeated in an election in February.
Musharraf has stubbornly held onto the presidency despite having lost parliamentary backing and public support, and talk hit fresh heights in the past week that he was planning to step down and the newly elected civilian leaders to run the country.
"I am not tendering resignation now," he told a group of journalists in a briefing that was later broadcast by all Pakistani news channels.
However, with the government proposing sweeping changes in the constitution to curb his power, he indicated that he would not like to be reduced to a ceremonial head of state.
"I will keep watching. I can't become a useless vegetable," he said.
Musharraf said he was a "constitutionally" elected president of the country and was performing his duties strictly according to constitution.
"I'm not interfering in the affairs of the government. I want to say it emphatically."
Musharraf said he would decide his future by keeping in mind whether he could deliver any good for the country.
He also said he had sound relations with US President George W Bush, but that would have little influence on whether he stayed in office or not.
"My going or staying depends on Pakistan and me and nobody else," he said.