The protest leaders held talks with the government representatives which were "successful", paving way for ending the protests peacefully without any bloodshed or violence, state-run Pakistan Television (PTV) reported.
Interior Minister Nisar Ali Khan told reporters that protestors have called off the demonstrations after talks with government officials.
"We will take the opposition parties and parliament into confidence about banning protests in Red Zone in Islamabad," he said.
The government also agreed to release hundreds of "innocent" people arrested during the four-days old stand-off at Islamabad's Red Zone.
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The government also promised not to show any leniency towards anyone convicted for blasphemy.
Khan said that 1,070 protestors were arrested in Islamabad and Rawalpindi and those found innocent will be released.
Qadri, who was Tasser's security guard, had killed the governor of Pakistan's most populous state in 2011 after he visited Aasia Bibi in her jail cell and expressed support for her, even promising a presidential pardon to the mother-of- five.
To another demand of imposing Sharia in the country, it was decided that the clerics would submit detailed proposals to the ministry of religious affairs.
For checking alleged obscenity on media, the two sides agreed that protest leaders will file complaints to the Pakistan Electronic Media Regulatory Authority.