Britain's Gordon Brown to resign as prime minister

LONDON -- British Prime Minister Gordon Brown made a bid to keep his beleaguered Labour Party in power after it was punished in elections last week, announcing Monday he will resign by September at the latest even if the Liberal Democrats -- being wooed by the Conservatives -- decide to join his party in government.

The political theater, played out in front of the iconic black door of No. 10 Downing Street, comes as David Cameron's Conservatives -- which won the most seats in Parliament but fell short of a majority -- struggled in their attempts to win over the third-place Liberal Democrats.

Brown's party has been willing to entertain supporting the Liberal Democrats' demand for an overhaul of the voting system toward proportional representation, which would greatly increase that party's future seat tallies. But evening brought a further twist with a counteroffer from the Conservatives -- of a referendum on a less dramatic type of electoral reform.

While uncertainty prevails, to the displeasure of the markets, one thing appears certain: The career of Brown -- the Treasury chief who waited a decade in the wings for his chance to become prime minister -- is winding to an end.

Brown, looking statesmanlike but resigned to political reality, accepted blame for Labour's loss of 91 seats in last week's election and its failure to win a parliamentary majority.

No other party won outright either, resulting in the first "hung Parliament" since 1974 and triggering a frantic scramble between Brown's Labour and the main opposition Conservatives to broker a coalition -- or at least an informal partnership -- with the Liberal Democrats.

"As leader of my party, I must accept that that is a judgment on me," Brown said, offering to step down before the party conference in September.

Brown said Liberal Democrat leader Nick Clegg had asked to begin formal coalition talks with the Labour Party and said he believed their parties might form a center-left alliance. Clegg had previously suggested Brown's departure would likely be a condition of any deal with Labour.

The Liberal Democrats have seemed genuinely open to a deal with the Conservatives -- who are less ideologically compatible with them than they are with Labour -- largely out of a sense that Cameron won a moral mandate and supporting him was expected by the nation at a time of economic turmoil.

But Brown's statement appeared to give Clegg's party a viable alternative, and real temptation: join a possibly short-lived alliance, remove the unpopular Brown, and pass electoral reform that could transform their fortunes and even banish the Conservatives to the political wilderness.

The day's drama disappointed those hoping for a swift resolution and deepened the post-election limbo that many feared could further undermine confidence in Europe's financial markets. The pound fell nearly 1.5 cents against the dollar after Brown's statement on his future, trading at $1.4866 late Monday.

Belying morning optimism and buoyant statements by party spokesmen, the Liberal Democrats announced by afternoon that they hadn't yet reached an agreement with the Conservatives on education funding, fair taxation and electoral reform. Then came Brown's offer.

Clegg said the Liberal Democrats and Conservatives had "some very constructive talks ... and made a great deal of progress. But we haven't yet reached a comprehensive partnership agreement."

The Conservatives said their final offer on electoral reform was for a referendum on the "alternative vote" electoral system, under which voters rank candidates by preference and second-choice votes are allocated if no candidate wins 50 percent of the first preference votes. The result could give Clegg's party more seats -- but it would not constitute the revolution that proportional representation would.

Under proportional representation -- widely used in continental Europe -- the Liberal Democrats, with almost a quarter of the vote, would have that proportion of parliament seats. Under Britain's current system they won only 57 out of 650, or just 9 percent of the seats.

Cameron's center-right Conservatives won 306 seats and Labour 258. Smaller parties took the rest.

William Hague, a senior Conservative lawmaker and Cameron's de facto deputy, said that given that breakdown it appeared unlikely that the Conservatives could form a minority government on their own -- a scenario that is allowed but would not survive a no-confidence vote.

He also said voters would not want to see a second un-elected leader. Brown was handed the reins from former Prime Minister Tony Blair.

Hague said the Conservatives had offered the Liberal Democrats a full coalition, with Cabinet positions for members of Clegg's team and a pledge not to hold a new national election for at least two and a half years.

Though the Conservatives have offered to hold and support a House of Commons vote on holding a public referendum on changing Britain's electoral system, Hague confirmed that his party would campaign to persuade the public to oppose any reforms.

Cameron and Clegg spoke Monday afternoon, but no further meetings of their negotiating times are planned at this stage, Hague said.

A Labour-Liberal Democrat alliance would still have to draw on the support of smaller, marginal parties -- including nationalist parties Scotland and Wales and the Democratic Unionist Party in Northern Ireland.

But that possibility left some Labourites uncomfortable. Former Home Office Secretary John Reid said such a pact "would be mutually assured destruction."

"If we appear to be snubbing the electorate, and get a coalition of second and third parties and some parties from Scotland and Northern Ireland, I think we will rue the day," Reid told Sky News.

He said that while such a deal might keep Labour in power a little while longer, it ran the risk of alienating even more voters from the party.

"I think in politics you can win the minutes and lose the hours," he said.

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.

Britain has a record 153 billion-pound ($236 billion) deficit that many believe the Conservatives would tackle more decisively than Labour.

Liberal Democrat spokesman Simon Hughes said a deal was unlikely within 24 hours but predicted "a government by the end of the week."

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

Brown, 59, spent a decade as Prime Minister Tony Blair's treasury chief, but craved the top job himself and is widely believed to have negotiated a handover years ago. When he finally got it, in June 2007, he quickly found himself confronting an economic crisis, a divided party, and a parliamentary expenses scandal that fueled public disgust with politicians.

It was also a misfortune for Brown to follow the charismatic Blair. He was brooding and awkward by comparison. A run-in with a voter at the end of the campaign -- he called her "a bigoted woman" not knowing he was being recorded -- seemed to confirm the caricature and plunged his campaign into a tragicomic last-minute crisis.

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Associated Press Writer Raphael G. Satter contributed to this report.