In yesterday's inconclusive second-round ballot, Mr Clarke received 64 votes, up 15 on last week's first round; Mr Hague got 62, up by 21; and John Redwood won 38, an additional 11 votes.
Mr Redwood was automatically eliminated, leaving Mr Clarke and Mr Hague to fight for the Redwood vote. Some Euro-sceptic MPs, including Teresa Gorman, immediately switched to Mr Clarke, describing him as a "big hitter"; others to Mr Hague; and others spoke of abstention.
Mr Redwood, who is expected to declare his hand today, was being wooed by both the Clarke and Hague camps, and Westminster was rife with rumours that Mr Clarke had given a clear signal to Mr Redwood that he could become the Shadow Chancellor in his team.
Mr Redwood held separate talks for more than half an hour with Mr Clarke and Mr Hague, and then met 18 of his supporters at the Victoria headquarters of the right-wing think tank Conservative 2000, which he heads. Clarke allies denied a deal had been reached.
The essential agony of the Redwood vote was summed up by James Cran, a Euro-sceptic MP who originally voted for Michael Howard and who backed Mr Redwood yesterday. He said of Mr Hague: "There is one candidate who has got the right agenda but I'm not sure he is a heavy hitter in the House, which the leader of the Opposition has to be. And then I've got another candidate who is a heavy hitter but who hasn't got the right agenda, particularly on Europe. So I have got a classical dilemma to resolve by sometime on Thursday morning."
It is possible that so many Euro-sceptics could abstain in tomorrow's final ballot that the new leader might be left without the 83-plus votes needed to give him the support of a majority of the 164 Tory MPs.
The man who comes top in such circumstances would win the leadership - but he would be so damaged that he could not be expected to survive for the rest of the Parliament. That result could raise the real prospect of yet another Tory leadership challenge, once new rules had been set up to give party members a vote for the first time. It might also increase the temptation for the former Cabinet ministers Michael Portillo and Chris Patten to seek a return to the Commons, to stage a more clear-cut contest.
Last night, the torn loyalties of the Redwood vote turned to angry exchanges in Commons corridors. One Redwood supporter said he would wait until Mr Redwood had given a lead, but another Redwood voter told him: "You can't possibly vote for Clarke." Yet that was precisely what Teresa Gorman was saying she would do. Julian Lewis, who voted for Mr Redwood, said he was thinking of abstaining.
John Townend, chairman of the right-wing 92 Group, said he would be writing to all group members today, urging them to vote for Mr Hague. "If the right can't get its act together over this we might as well pack up," he said. "One candidate is a Europhile and supported by the left. William Hague is on the centre-right, and in the last two weeks he has taken a much tougher position on Europe. His views are more in line with John Redwood's."
One of Mr Clarke's backers said: "Ken is cutting no fine deals, but he recognises that on domestic policy, education and health, Mr Redwood is putting some interesting ideas forward which will be taken up." Michael Heseltine reiterated that while Mr Clarke was offering unity, and the inclusion of all strands of thinking in his frontbench team - that was not on offer from Mr Hague.
Referring to Mr Hague's threat to exclude anyone who did not toe his line in opposition to the single currency, Mr Heseltine said: "It is wrong for a potential leader to lay down terms which must divide the party, by definition, that excludes a significant part of Conservative thinking."
However, Peter Lilley, who backed Mr Hague after dropping out of the contest in the first round, said that he believed his candidate could unite the party around a Euro-sceptic stance. "I think the party as a whole will have no difficulty with the position William Hague has spelt out, of ruling out membership of the single currency in the next Parliament. That was the direction we were moving in, and I am sure that will be acceptable to the whole bulk of the party," he said.
One Clarke supporter angrily protested to a Hague campaigner that Mr Clarke would be excluded from a Hague Shadow Cabinet. But in a clear sign that the Hague camp were trying to win back some Clarke votes, he was assured: "It's a technicality."
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