Bhutto's party would expect to reap a considerable sympathy vote following her assassination in a gun and bomb attack as she left a rally in Rawalpindi on Thursday.
Nearly 60 people were killed in the ensuing violence and analysts said a postponement could lead to renewed rioting. Tension remains high and markets are gripped by fears of capital flight if security worsens.
In his speech, Musharraf said he was certain allies of the al Qaeda militant group were behind Bhutto's killing.
Al Qaeda-linked militants are involved in all attacks in Pakistan, including recent attacks on security forces and politicians, he said. "I want to say it with certainty, that these people martyred ... Benazir Bhutto," he added.
Bhutto was seen as a U.S. ally and was one of the strongest moderate voices trying to wrest back influence in the Islamic world from men like Osama bin Laden.
Her killing has spawned a host of conspiracy theories, some Pakistanis believing she was killed by rogue elements in the establishment.
Musharraf said he had asked British police for help in investigating the assassination and Scotland Yard said a group of counter-terrorism officers would go to Pakistan shortly.
Sharif's Pakistan Muslim League (Nawaz) said opposition parties should unite and demand that Musharraf and the election commission step down.
"General Musharraf has failed to ensure law and order and the election commission has failed to hold elections on schedule," said spokesman Ahsan Iqbal. "... both must resign and we should have a neutral national unity government and an independent election commission."
Echoing that view, the International Crisis Group said in a briefing "If Pakistan is to be stable in the wake of Benazir Bhutto's murder, President Musharraf must resign and a quick transition follow to a democratically elected civilian government."
"Unless he steps down, tensions will worsen and the international community could face the nightmare of a nuclear-armed, Muslim country descending into civil war from which extremists would stand to gain," the think tank added.
Pakistani shares slid 2.3 percent, taking the fall in the main share index since Bhutto's death to nearly 10 percent.
"The market was expecting a delay ... The issue now is what reaction the political parties will have and that might affect the market," said Ahsan Mehanti, chief executive of Shehzad Chamdia Securities, after the announcement of the poll delay.
