KARACHI, Pakistan, March 20—Possibilities for a settlement of Pakistan's constitutional crisis were believed improved here today with the announcement that Mr. Bhutto would fly tomorrow to join the talks President Yahya is having with political leaders of East and West Pakistan in Dacca.

Mr. Bhutto indicated that he would discuss with the President and Sheik Mujib the participation of his Pakistan People's party in an interim government.

Political circles here saw the formation of an interim coalition government as one step in a solution of the crisis. The interim regime, according to speculation here, would nominally exercise power while the National Assembly met and adopted a new constitution.

Formation of a permanent government under the new constitution would then follow, with the Assembly acting as the chief legislative body.

This formula would fulfill one of the demands made by Shiek Mujib, that “people's representatives” assume power be fore the Assembly meets.

At a news conference here today, Mr. Bhutto asserted that there must be an understanding on the nature of the planned constitution before the Assembly meets and said that there now seemed to be recognition of this in Dacca.