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ISLAMABAD, Nov 21 (Reuters) - Pakistan's parliament elected Mir Zafarullah Khan Jamali of the pro-military Pakistan Muslim League party as the country's first civilian prime minister on Thursday since a 1999 military coup.

Accepting the vote, Jamali endorsed the legacy of President Pervez Musharraf who seized power in a 1999 bloodless coup, stressing the general's achievements in foreign and economic policy in particular.

"On the external front, because of the policy of the last three years, Pakistan has become a frontline state, Pakistan has respect and dignity," Jamali said.

Pakistan became a key ally in the U.S.-led war on terror after the September 11, 2001 attacks on the United States, and Musharraf's government has also won praise from Western donors for stabilising the economy.

"The economy has picked up, we are about to be out of the woods," Jamali said in a confident acceptance speech. "Thanks to Musharraf who gave a road map and fulfilled his promise... the transfer of power is going on."

Musharraf promised on Wednesday night to hand over the running of the country to a new prime minister, but will remain as president for a further five years with the power to dismiss parliament.

The soft-spoken Jamali, a prominent politician from the southwestern province of Baluchistan, won 172 votes defeating the candidates from an Islamist alliance and a liberal party of exiled former Prime Minister Benazir Bhutto.

Jamali won the support of smaller parties and some defectors from the Peoples Party to secure a thin majority of the total 328 votes cast.

A general election on October 10 failed to produce any party with a clear majority to form a government. Coalition talks between the Muslim League and the six-party Islamic alliance broke down over differences over what powers Musharraf should wield over the civilian government.

The Muslim League says it supports constitutional amendments introduced by Musharraf this year that extended his powers and institutionalised the role of the military through a national security council.

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