Pakistan's top court Friday recommended legal proceedings against a former army chief and head of intelligence for allegedly bankrolling politicians to keep the current ruling party from winning the 1990 election.

It was a landmark ruling 16 years after retired air marshal Asghar Khan filed a case accusing the Inter-Services Intelligence (ISI) agency of doling out money to a group of politicians contesting against the Pakistan People's Party (PPP).

Pakistan has had three bloodless military coups in its history and has been ruled by four military rulers.

Ex-president Ghulam Ishaq Khan, retired army chief Aslam Baig and retired ISI chief Asad Durrani "acted in violation of the constitution by facilitating a group of... politicians", Chief Justice Iftikhar Muhammad Chaudhry said.

Khan died in 2006. He became president in 1988 upon the mysterious death in a plane crash of military dictator Zia-ul-Haq. Baig retired as army chief in 1991 and Durrani from the ISI in 1993.

"Their acts have brought a bad name to Pakistan and its armed forces as well as secret agencies in the eyes of the nation," Chaudhry said, ordering the federal government to "take necessary steps... against them".

The Supreme Court judge also said that legal proceedings should be initiated against the politicians, who allegedly received donations to spend on the 1990 general election campaign.

The identities of the politicians in question were not named in the court order.

Chaudhry said the ISI and the military had no constitutional right to interfere in the political affairs of the country or the formation of any government.

Pakistani Prime Minister Raja Pervez Ashraf said "actions will be taken against all those who gave money and took money."

He welcomed the ruling, saying it was a "day of democracy's victory" and the ruling vindicated his slain leader, twice-elected prime minister Benazir Bhutto, who had said that the 1990 election had been "stolen" from the PPP.

"Today those who stole the mandate of people have been exposed before the nation. They should apologise publicly, may be the nation will forgive them," Ashraf said.

"The investigation will be transparent and those found involved in it will not escape punishment," he added.

Analyst Imtiaz Gul said the court order was a step towards doing away with the impression the judiciary had been "soft towards the military establishment".

"The order underscores the assertiveness of the judiciary which stands determined not to allow what it says is any illegal, unauthorised action by any state organ," he told AFP.