Shehbaz Sharif, a younger brother of Nawaz Sharif, will however have to wait for 45 days to get elected as a member of the National Assembly -- a legal requirement to contest election for office of the prime minister.
For the interim period, former petroleum minister Shahid Khaqan Abbasi will serve as the new premier.
The decision was made at a meeting of the Pakistan Muslim League-Nawaz chaired by the former prime minister in Islamabad. The decision was later announced by Nawaz Sharif himself amid loud applause by the parliamentarians and party leaders.
"I have accepted the Supreme Court’s judgment despite all my reservations. I have done so much for this country. I did not deserve this humiliating ouster. I do not approve this," an emotional Sharif said.
"I have been disqualified for concealing an amount that I never received," he said, referring to the court ruling which disqualified him for not declaring the 10,000 dirhams ($2,722) salary, he says he did not withdraw from a Dubai-based company, in his nomination papers for the 2013 general elections.
In line with the Supreme Court's order, President Mamnoon Hussain is likely to summon the National Assembly session next week for election of the new premier for the next 45 days.
The ruling party and its allies enjoy a two-thirds majority in the 342-member house, and will easily get its candidates elected for the interim period, and then the permanent prime minister.
Abbasi, close aide of Nawaz Sharif
Abbasi, a close confidant of Nawaz Sharif, was elected as a National Assembly member in the 2013 general elections from famous tourist destination Murree, near capital Islamabad.
He has been elected from the same constituency six times since 1988. His father Khaqan Abbasi, who too remained a minister in the 1980s, was killed in an ammunition depot blast in Islamabad in 1987.
Sharif resigned Friday following a Supreme Court judgment against him over his involvement in the Panama Papers scandal.
The judgment, which came after a 273-day hearing that gripped the nation, also bars him from holding leadership of his party.
The court also directed the country's anti-corruption authorities to file separate corruption cases against the former prime minister, the finance minister, his two sons, daughter, and son-in-law for their involvement in the Panama Papers scandal.
The judges disqualified Sharif after considering the report of a six-member investigation team, which was formed in April to look into the scandal.
Investigators, including members of the country's two top spy agencies -- the Inter-Services Intelligence and the Military Intelligence -- had questioned Sharif’s children, his son-in-law, Shehbaz Sharif, as well as two close aides.
Sharif ousted third time
The Supreme Court also ruled that the prime minister had not fulfilled Articles 62 and 63 of the constitution, which say any public office holder should be honest and truthful.
This is the third time Sharif has been ousted before completing his five-year tenure as prime minister. His two previous governments were dismissed over corruption charges and through a bloodless military coup in 1992 and 1999, respectively.
The Panama Papers, released by the Washington-based International Consortium of Investigative Journalists in April 2016, pointed fingers at 140 politicians worldwide, including 11 current and former national leaders.
The investigation claimed they worked with the firm Mossack Fonseca to establish shadow companies for global transactions and money laundering.
Their revelation sent shockwaves across the world, resulting in the resignation of Iceland’s Premier Sigmundur David Gunnlaugsson, and put political pressure on then British Prime Minister David Cameron, who later admitted to having a profitable stake in a fund owned by his father.