"If Musharraf stands for enlightened moderation in a fight for his life and for the life of his country, the United States should be willing to make hard choices too, and make the difficult long-term commitment to the future of Pakistan," the commission said in its final report.
The panel underlined the importance of Pakistan in the struggle against terrorism, saying it harboured scores of al Qaeda members, many Taleban fighters and - perhaps - terror mastermind Osama bin Laden.
Aside from Pakistan, the other Asian countries identified in the report, as terrorist bases, are Afghanistan and Southeast Asia - "from Thailand to the southern Philippines to Indonesia."
The commission said the United States should consider a long term and comprehensive assistance strategy for Pakistan if it continued to co-operate in the fight against terror.
"Sustaining the current scale of aid to Pakistan, the United States should support Pakistan's government in its struggle against extremists with a comprehensive effort that extends from military aid to support for better education, so long as Pakistan's leaders remain willing to make difficult choices of their own," the report said.
The constant refrain of Pakistanis is that the United States long treated it as "allies of convenience," the commission noted.
"As the United States makes fresh commitments now, it should make promises it is prepared to keep, for years to come," it said.
The commission also urged the US government to remain a key supporter of ongoing peace negotiations between Pakistan and its nuclear neighbour India.
President Bush said he would study the report and work with various parties within his administration and the Congress to "move forward on these recommendations."