Pakistan Tehrik-e-Insaf said it will field Hashmi against 63-year-old Sharif for the formal election of the Prime Minister in Pakistan's National Assembly.
The Tehrik-e-Insaf's parliamentary committee also chose Khan as its parliamentary leader in the National Assembly or lower house of parliament.
The PML-N has been in negotiations with both the Pakistan People's Party and the Tehrik-e-Insaf to ensure Sharif's election as prime minister for a record third time but the latter has showed no flexibility on the matter.
The Tehrik-e-Insaf's move is largely symbolic as it does not have the numbers in the National Assembly to ensure the election of its candidate.
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Hashmi, a former PML-N leader, is the president of the Tehrik-e-Insaf while Khan is the party's chairman.
Tehrik-e-Insaf parliamentarian-elect Shehryar Afridi and the party's women's wing president, Munaza Hasan, will be fielded for the posts of National Assembly Speaker and Deputy Speaker, respectively.
Khan said his party will play an effective and responsible role as the opposition in the 342-member National Assembly.
"The Election Commission should investigate complaints regarding rigging.
Meanwhile, the PML-N has nominated only Nawaz Sharif for the post of Prime Minister while deliberations are underway to name members for other slots.