Pakistan has been a key US ally in the war on terror, but is facing challenges from resurgent Islamic militants in the lawless border areas.

Terror mastermind Osama bin Laden and remnants of al-Qaeda are believed to be hiding out in the region, now regarded as a safe haven for insurgents conducting attacks in Afghanistan. Prime Minister Kevin Rudd said the response of the new Government was a core concern for all countries with troops across the border in Afghanistan.

''Therefore, a core concern for those of us engaged in Afghanistan is the future shape of the Government in Islamabad and the posture it will adopt in terms of cross-border cooperation with the government in Kabul, and with those of us who are allies and friends of the US engaged in military actions on the ground in what is a difficult, dangerous and bloody environment for our troops,'' he said.

Foreign Minister Stephen Smith said Australia had been worried for some time about Pakistan's stability and it was hoped the resignation would bring a difficult period to an end. He said Australia had offered to help the Pakistani Government.

''We are obviously not talking about use of military forces or combat troops, but we stand ready, willing and able to render the Pakistani Government whatever assistance we can to help it bring about a period of stability.'' AAP