A spokesman said Mr Davies' lapse of judgement in the run up to his being mugged after an encounter with an unknown man on Clapham Common, south London, on Monday night, had cost him dear. Although there were still no details on what had actually taken place, Mr Davies had said the events of that night "would haunt him forever".
Mr Davies will remain as MP for Caerphilly, but he said he would tell the Prime Minister that he could no longer put himself forward as a future first minister of Wales.
Earlier yesterday, sources close to the disgraced former Welsh Secretary had been in bullish mood, saying that he planned today to break his silence of the past two days and give two television interviews declare his intention to stand for the top post.
Mr Davies, who resigned from the Cabinet on Tuesday after a bizarre encounter with a man on Clapham Common, south London, was maintaining until last he could still be an effective leader of the Welsh Labour Party.
He is still expected to speak to a crucial meeting of his local Labour Party in his Caerphilly constituency tonight.
His apparent decision yesterday to tough out the bad press, the worst of which is expected in the Sunday tabloids, had surprise several MPs and ministers in the wake of the first public calls by a Labour politician for his resignation as leader. Last night he appeared to bow under the growing pressure.
David Morris, the Euro-MP for South Wales West, said that Mr Davies, who has gone to ground in recent days with his wife and daughter, should quit now. "I don't think he has got much option except to go. Because of the rumours circulating, because it appears that he in fact hasn't got confidence in his own people to share with them what he has done, I believe he is losing sympathy."
Mr Davies' supporters claimed last night he had huge support and goodwill within the Welsh Party and there was no other strong candidate for First Minister.
But the dangers awaiting any comeback plan were underlined yesterday when a fourth person was arrested in Brixton in connection with the theft of Mr Davies' car. Three people were arrested on Wednesday and released on bail.
The Prime Minister, Tony Blair, told yesterday's cabinet meeting - the first attended by the new Welsh Secretary, Alun Michael, that many MPs felt sympathy for Mr Davies.
Mr Blair's official spokes- man said that Mr Blair had been in regular contact with Mr Davies and talked to him on the telephone yesterday morning "on a personal level".
Mr Davies had told Mr Blair that press reports that he was to be interviewed a second time by police were "news to him", the spokesman said.Reuse content