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But he also made it clear that "we will not accept any solution of Kashmir with the stamp of 'made in India' because this dispute cannot be resolved without the involvement of Kashmiris and Pakistan".
Speaking on Capital Talk, a Geo TV programme hosted by Hamid Mir, he said nothing important was discussed with the US CENTCOM Chief General Abizad in a meeting Monday.
"We are not planning any new anti-al Qaeda operation, we are already doing lot of things, he just came and thanked for our cooperation in war against terror," he said.
The number of US troops in Afghanistan was not satisfactory, "but now I think that Afghan National Army should take the control of troubled areas instead of US Army. They must think over an exit strategy now," he said.
He dispelled reports that Pakistan would soon come under more pressure following some new disclosures by Libya to the IAEA, saying "we are not facing any new pressure because they are already satisfied from our cooperation."
He also clarified that "China never showed any concern on my personal equation with US President George Bush and US never expressed any concern on our equation with China, every country has its own relations."
He disagreed with the impression spread by a section of Western media that Bush can trust Musharraf but US administration does not trust the Pakistani establishment.
He agreed that there was an impression "sometime ago in US media that I am the only non-terrorist in a terrorist country, but now this impression is changing, the whole US administration is on board with us because we have convinced them through our actions not through words."
The majority of people in Pakistan are liberal but "some people always try to create issues by naming America," he said, condemning MMA leader Hafiz Hussein Ahmed's remark that the government was reluctant to have a column in Pakistani passports identifying the holder's religion.
"America has nothing to do with passport issue," he said, pointing out that it was America "which helped the Muslims in Bosnia and bombed the Christian Serbs but some mad people in our country says that America is enemy of Muslims which is not correct.
"I am cooperating
On the recent rocket attacks in the gas fields of Baluchistan, President Musharraf warned the trouble makers saying that "this is not 70's and we will not climb behind them in the mountains, they will even not come to know that what and from where something came and hit them".
These elements are getting money and weapons from across the border but they are locals and they claim that they are nationalists but they are involved in anti-national activities, he said.
Asked about the controversy over his retaining his army uniform and the presidency, he said the "17th amendment in the constitution allows me to remain in uniform, I am not violating the constitution."
"The MMA leadership gave a promise that if I announce to take off my uniform then they will not only elect me President from parliament but they will also support the National Security Council, unfortunately they lied," he said.
"I see them lying in Capital Talk but I never change my decision tit for tat, I decided to remain in uniform due to some changing domestic and international developments," he added.
Denying any deals with former prime ministers Benazir Bhutto and Nawaz Sharif, he said they would not be allowed to return to Pakistan, though he was willing to attend rallies organized by their parties.
"My adviser Tariq Aziz is not in contact with (Benazir Bhutto's) PPP, they are approaching me from different sides but I have made it clear that national assembly will complete its tenure, elections will be held in 2007, he said.
"I phoned Shahbaz Sharif in Saudi Arabia for the condolence on his father's death, Shahbaz requested me to talk with his elder brother Nawaz Sharif, that's all."
Asked to comment on the recent statements of MQM Chief Altaf Hussein in India, Musharraf said that "two nation theory is a historical reality, it is still a reality it will remain a reality, if someone is confused on that issue even after a half century, that is his mental problem.
"We should not speak on that issue, we should not give importance to those who don't believe in two nation theory because fact is that Pakistan was created in the name of two nation theory".