Gordon Brown announces resignation

LONDON - British Prime Minister Gordon Brown has announced he will resign by September at the latest.

Brown's startling news conference upped the ante in talks between the Conservatives, who won the most seats in last week's election but not a majority in Parliament, and the Liberal Democrats, whose third-place finish still leaves them kingmakers.

Almost immediately, the Tories rushed out to announce they would offer the Liberal Democrats a referendum on electoral reform - their key demand in the talks - in a last-ditch bid to secure their loyalty. The Conservatives have been reluctant to accept such reform because they fear it would freeze them out of power.

The new voting system proposed by both the Conservatives and Labour would bring a major change, but is not as sweeping as a plan put forward in the Liberal Democrat election platform.

Brown said the Labour Party, which lost more than 90 seats in the election, would begin a leadership contest to replace him while he focused on talks aimed at breaking Britain's election deadlock.

"As leader of my party I must accept that as a judgment on me," Brown said, referring to Labour's poor showing in the election.

In a statement outside his office at 10 Downing Street, Brown said Liberal Democrat leader Nick Clegg had asked to begin formal coalition talks with the Labour Party and the two could form a centre-left alliance. Clegg had previously said Brown's departure would likely be a condition of any deal.

"There is a progressive majority in Britain, and I believe it could be in the interests of the whole country to form a progressive coalition government," Brown said.

Less than two hours later, William Hague, a senior Tory lawmaker and Cameron's de facto deputy, rushed out his party's counteroffer.

"We will go the extra mile, and will offer to the Liberal Democrats in a coalition government the holding of a referendum on the alternative vote system, so the people of the country can decide what the best electoral system is for the future," Hague said.

Under the alternative vote system, which is used for some elections in Australia, voters order candidates in preference, and second choice votes are allocated if no candidate wins 50 per cent of the first preference votes.

Hague said any pact between Clegg's Liberal Democrats and Labour "would not be stable or secure, because it would rely on other minor parties," to pass laws.

"It would have the second unelected prime minister in a row, something we believe would be unacceptable to the great majority of people in this country, and would impose a voting reform without any consultation with the people of this country - something that would be profoundly undemocratic," he said.

Hague said it now appeared unlikely that the Conservatives could form a minority government on their own - as Clegg's party appeared certain to chose to enter a coalition with either Cameron's party or the incumbent Labour.

Cameron's centre-right Conservatives won 306 of the 650 seats in the House of Commons, 20 short of a majority. Brown's centre-left Labour won 258 and the centre-left Liberal Democrats took 57 seats. Other smaller parties took the rest.

Brown said he hoped a new Labour leader would be appointed at the party's annual convention in September. Foreign Secretary David Miliband and Education Secretary Ed Balls will likely be leading contenders to succeed Brown as party leader.

The pound fell nearly 1.5 US cents against the dollar after Brown's statement, trading at US$1.4866 late on Monday, reflecting some fear of Labour's continued presence in the government.

Britain has a record 153 billion-pound ($316 billion) deficit that the Conservatives have pledged to tackle faster than Labour. But Brown said his focus during his remaining time in office would be ensuring economic recovery.

Cameron's party was to meet later on Monday local time and the Liberal Democrats indicated they too could gather again.

Clegg clearly was facing a tough choice: Trying to overcome ideological incompatibility to broker a deal with Cameron and the Conservatives or propping up Brown's defeated Labour Party.

Yet in the last election, Clegg's party earned 23 per cent of the vote but got only 9 per cent of the seats in Parliament.

Brown's announcement signals an end to a political career marked by great promise, considerable achievement and ultimate disappointment.

He spent a decade as Prime Minister Tony Blair's right-hand money man, but craved the top job himself. When he finally got it in June 2007, Brown faced economic crisis, a divided party, public disgust with politicians - and finally defeat in last week's election.

It was Brown's fatal political misfortune to follow the charismatic Blair. Brown was brooding and awkward by comparison, and a recent run-in with a voter - whom he called a "bigoted woman" - showed how much he lacked a common touch. But behind closed doors, Brown, 59, was often described as warm and agreeable.

Friends also say the son of a Church of Scotland minister is dogged, determined and fiercely loyal to Labour - a trait that prompted him to offer his resignation overnight so that his party had a chance at staying in office.

- AP