Brown to resign, as his party seeks coalition

British Prime Minister Gordon Brown has taken the dramatic step of announcing his intention to resign by the fall, bolstering his party's bid to forge a coalition government.

Brown's Labour Party landed in second place last week, earning about two million votes less than the Conservatives. Neither party won a majority of seats, leaving them to vie for a coalition government with the third-place party, the Liberal Democrats.

"The reason that we have a hung parliament is that no single party and no single leader was able to win the full support of the country. As leader of my party, I must accept that that is a judgment on me," Brown said on Monday, offering to leave his post as party leader prior to September, when Labour will hold its annual meeting.

Both the Conservative and the Labour parties have upped bids to gain the support of the Liberal Democrats and form a new government. But it remained unclear which party the Liberal Democrats would side with.

"We will try to make everything as clear as possible as soon as possible," said Liberal Democrat leader Nick Clegg Monday night, as he arrived at a party meeting to discuss the competing coalition offers.

The Conservatives, led by David Cameron, were thought to be close to a deal with the Liberal Democrats earlier on Monday. But after Brown's announcement it appeared Clegg was leaning towards a deal with Labour.

"We need a government that lasts, which is why we believe, in the light of the state of talks with the Conservative party, the only responsible thing to do is to open discussions with the Labour party to secure a stable partnership agreement," Clegg said in a statement Monday evening. "Gordon Brown's decision is an important element which could help ensure a smooth transition to the stable government that everyone deserves."

After Brown announced his intention to resign by the fall, his Labour Party and the Liberal Democrats announced they were beginning formal talks.

Soon afterward, the Tories offered to hold a referendum on electoral reform, a key priority for Clegg's Liberal Democrats.

Brown's decision to resign was also hailed by members of his own party, many of whom were displeased with the performance on the campaign trail.

The embattled prime minister signaled his intent to stay on as the country's leader until the fall, while proposing a "progressive government" made up his party, the Liberal Democrats and presumably, some of the smaller regional parties.

Brown added that electoral reform, a key Liberal Democrat demand, would be a priority.

Earlier, there were reports that an outline of a deal was reached between the centre-right Tories and the centre-left Liberal Democrats. The BBC said the deal would be not be a full coalition but would go further than the Liberals just supporting the government on confidence issues.

Cameron and Clegg met in person Monday to discuss the deal. Clegg took the deal to his party, but it appears rank-and-file Liberal Democrat MPs were not sold.

The Liberal Democrats, who took 23 per cent of the popular vote, only won 9 per cent of the seats in the House of Commons. Their key demand in talks has been electoral reform, such as proportional representation, which is a tough sell to the two larger parties.

The Conservatives won 306 seats, Labour took 258 and the Liberal Democrats took 57 in the 650-seat British House of Commons. Under any number of proportional representation scenarios, the Liberal Democrats would improve their number at the expense of both Labour and the Tories.

Clegg, the potential kingmaker, urged British voters to "bear with us a little longer" on Monday as talks went on for a fourth straight day.

"All political parties, all political leaders are working flat out, round the clock, to try and act on the decision of the British people," Clegg said. "(But it's) better to get the decision right rather than rushing into something which won't stand the test of time."

CTV's Janis Mackey Frayer said the British public is growing weary from the "leadership vacuum."

"This is coming at a time when there's great economic uncertainty that is spreading across Europe and Britain has its own budgetary problems," she told CTV News Channel from London, England Monday. "There's the sense they want the leaders to work it out and then to get to work."

Former Conservative Party Prime Minister John Major has been pushing for a quick deal.

"Everybody is looking at the compromises that may be necessary, but I don't think this is a dance that can go on for too long," Major told BBC Radio.

Both Clegg and Cameron may have a tough sell to their own parties on a deal. While their two parties agree somewhat on the need to pay down the country's debt and education reform, there are wide chasms of difference in foreign policy, nuclear power and Britain's role in the European Union.

Brown said he hoped a new leader could be chosen at the Labour Party's annual convention in September. Foreign Secretary David Miliband and Education Secretary Ed Balls are among the leading contenders for the job.

With files from The Associated Press