He was born on 20 December 1928 in Chhota Gala, a village in Tehsil Rawalakot, District Poonch, Azad Kashmir. He received his education from Government High School Rawalakot and was commissioned into the Pakistan Army on 15 November 1958. He was awarded with Sitara-i-Imtiaz and Sitara-e-Basalat.
In 1977, with the advice of all political parties, the Legislative Assembly of AJK and AJK Council had been dissolved while Sardar Muhammad Ibrahim Khan was the president. Major General Habib Ur Rahman was appointed as the President of AJK. Shortly after, he resigned due to illness.
On 5 November 1977, martial Law was declared in Azad Kashmir in the aftermath of the 1977 Pakistani military coup. Muhammad Hayat Khan, a brigadier at the time, was appointed as the caretaker, and later the President of AJK.