His announcement, startling despite the evident signs of melt-down in the Perot camp this week, abruptly leaves President George Bush and Governor Bill Clinton of Arkansas in a two-horse race. It came just hours before Mr Clinton made his emotional acceptance speech to the Democratic convention in New York.
Mr Perot, who had been haemorrhaging support in the opinion polls, said the revival of Democratic fortunes in recent weeks had convinced him he could no longer win outright. A continued campaign would be 'disruptive' to the country. It would force a deadlocked election and leave the US Congress to pick a president, he said.
But supporters and journalists who had spoken to Mr Perot this week said that he felt 'brutalised' and caricatured by growing press criticism of his record. He had also proved reluctant to dig deeply into his pocket to pay for television advertising to rescue his floundering campaign.
Both Republican and Democratic camps were scrambling yesterday to pick up Mr Perot's remaining supporters, who, by definition, have little faith in either party. Tens of thousands of volunteers nationwide had heeded the call for a crusade of ordinary people to rid the US of deadlocked, special interest politics. They were left stunned and, in many cases, bitter.
Conventional wisdom would make Mr Perot's withdrawal from the campaign - without formally entering it - good news for President Bush's chances of re-election on 3 November. Roughly two out of three of Mr Perot's remaining supporters are estimated to be more likely to vote Republican than Democratic.
President Bush, on holiday in Wyoming, welcomed the news of Mr Perot's withdrawal as a 'positive development'. He said that he believed the billionaire's supporters would back the Republican ticket.
But Governor Clinton - enthusiastically nominated at the convention on Wednesday - appeared to seize a golden opportunity early today to reintroduce himself to the American people as the only surviving standard bearer of political change.
In his stirring acceptance speech, Mr Clinton offered a 'new covenant' to get the country working together again as one people. 'Now that we have changed the world, it is time to change America,' he said.
He promised that his covenant would produce a new relationship between government and citizens - one that would produce jobs, provide health care for all, expand educational opportunity and bring the country together again. 'I call it a 'new convenant' - a solemn commitment between the people and their government - based not simply on what each of us can take but on what all of us must give to make America work again,' he said.
'We have got to go beyond the brain-dead politics of Washington and give our people the kind of government they deserve: a government that works for them,' Mr Clinton said.
He also made an impassioned appeal for the followers of Mr Perot to join his cause: 'Join us - together we will revitalise America.'
Mr Clinton contrasted his record as governor of Arkansas, one of the poorest states, with Mr Bush's record as president: 'He took the richest country in the world and brought it down. We took one of the poorest states in America and lifted it up.'
At a news conference at his Dallas headquarters, Mr Perot had said that the 'reinvigoration' of the Democrats in the past two weeks had persuaded him to abandon his presidency hopes. 'I believe it would be disruptive for us to continue our programme, since this would put it (the election) into the House of Representatives and would be disruptive to the country,' he said.
Though ignored at first, the Perot bandwagon had gathered pace in April and May as the President stuttered and stumbled and Governor Clinton emerged as the likely Democratic candidate, despite allegations of adultery and Vietnam draft-dodging.
Volunteer Perot campaigns sprang up in every state, staffed largely by people who had never played an active part in politics. Before he withdrew, the 'Perotnistas' had met the petition requirements to put Mr Perot on the ballot in 24 states.
But Mr Perot was his own worst enemy. His abrupt and autocratic manner, and his failure to flesh out his original critique of US politics with substantive ideas for reform, offended many potential supporters.
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