Tony Blair and Gordon Brown are deeply divided over the timetable and terms under which the Prime Minister should leave Downing Street.
As Blair allies accused Brown supporters of orchestrating a plot to topple the Prime Minister, the two men held two heated crisis meetings at No 10 but failed to break the deadlock between them.
On a day which saw the dramatic resignations from the Government of one minister and seven parliamentary aides who want Mr Blair to quit immediately, the rift between New Labour's two main architects fuelled speculation that the Prime Minister could soon be forced out of office by his own MPs.
More resignations could follow today unless Mr Blair makes a personal pledge about his departure timetable, critics warned last night. They claimed more than 100 Labour MPs were not satisfied by hints that Mr Blair would resign on 31 May next year and leave office on 26 July.
One opponent claimed the Prime Minister could be "out by the end of this week" unless he makes an immediate statement clarifying his intentions. In an attempt to survive, he is expected to do so today -but his statement may be short of the firm timetable demanded by his internal opponents.
Facing the gravest threat to his nine-year premiership, Mr Blair met Mr Brown yesterday morning and again in the afternoon and they also spoke by telephone. He rejected the Chancellor's demands as "totally unreasonable".
Sources claimed Mr Brown insisted that Mr Blair personally announce a timetable under which a new Labour leader would be in place before next May's elections to the Scottish Parliament, Welsh Assembly and English local authorities; that Mr Blair endorse Mr Brown as his successor and discourage other cabinet ministers from standing in the leadership election and accept a system of "co-decision" under which the Chancellor would have a veto over major policy decisions in the run-up to the handover.
Doug Henderson, a former minister and key Brown ally, spelt out the Brown camp's demands in a series of media interviews. He called for the leadership election to start by this November at the latest to ensure a new leader was installed by next March, so he could "set out his stall" well in advance of the elections.
As Mr Brown maintained an ominous silence, his camp denied orchestrating a putsch against Mr Blair. Allies of the Chancellor accused Mr Blair of damaging Labour's prospects of retaining power by clinging to office and refusing to honour his promise last year to ensure a "stable and orderly transition". They said it would be unreasonable for a new prime minister to take office next July as he would not be able to make any impact at the end of the political season.
Mr Blair's authority was ebbing away by the hour after Tom Watson, a junior defence minister and Brown supporter, resigned rather than remove his name from a letter signed by 15 Labour MPs calling on the Prime Minister to "stand aside." Mr Watson, who would have been sacked yesterday afternoon, outwitted Mr Blair by quitting yesterday morning.
The crisis deepened when seven other signatories joined him by quitting as parliamentary private secretaries, the lowest rung of the government ladder. They were Khalid Mahmood, Wayne David, David Wright, Ian Lucas, Mark Tami, Chris Mole and Iain Wright.
Kevin Brennan, a government whip, kept his job after denying as "completely untrue" a report in The Independent yesterday that he backed the letter and then withdrew his name. He said: "I have never signed any letter in the first place, so I could hardly have withdrawn my name from it".
In his reply to Mr Watson, Mr Blair warned that the move to oust him would risk a return to the divisions which kept Labour out of power for 18 years. He said: "The way to renew and win again now is not to engage in a divisive and totally unnecessary attempt to unseat the party leader, less than 15 months after our historic third-term victory; but through setting out the policy agenda for the future combined with a stable and orderly transition that leaves ample time for the next leader to bed in." One Blair aide claimed: "There is undoubtedly a plot to blackmail the Prime Minister to leave office. It is obviously being co-ordinated."
Blairites warned that the involvement of Brown supporters would harm the Chancellor in the eyes of the Labour Party and the public. With Mr Brown maintaining a public silence, he was urged by Blair allies to issue a statement of support.
One Blairite minister said: "The Prime Minister does not need to decide anything. The only person who needs to make a decision is Gordon Brown: does he want a stable and orderly transition or does he want to be the beneficiary of a bloody coup and inherit a bitterly divided party?" David Blunkett, the former home secretary, said: "It is now in Gordon Brown's - and the Labour Party's - best interests for those seeking the Prime Minister's immediate departure to back off. "No one can benefit from a split in the Government or the party now, or in the foreseeable future and this is patently avoidable by a return to common sense." As Mr Blair tried desperately to show his government was still functioning normally, Derek Twigg, a junior transport minister, was appointed Mr Watson's successor at the Ministry of Defence.
David Cameron, the Tory leader, said the Government was "in meltdown" and Mr Blair was a "lame duck".Sir Menzies Campbell, leader of the Liberal Democrats, said: "What is at issue is the national interest. Mr Blair should either resign or state a date."
A clear message
Sadly, it is clear to us - as it is to almost the entire party and the entire country - that without an urgent change in the leadership of the party it becomes less likely that we will win that election. That is the brutal truth. It gives us no pleasure to say it. But it has to be said. And understood. This is not a plot against you by people who want to reverse or slow down the progress you have led... But we believe that it is impossible for the party and the Government to renew itself without renewing its leadership as a matter of urgency. As utter Labour loyalists and implacable modernisers, we therefore have to ask you to stand aside.
Chris Bryant and 16 other Labour MPs
It is with the greatest sadness that I have to say that I no longer believe that your remaining in office is in the interest of either the party or the country... I share the view of the overwhelming majority of the party and the country that the only way the party and the Government can renew itself in office is urgently to renew its leadership... It is with the greatest regret, therefore, that I must leave the Government.
Tom Watson MP
I am sorry it has come to this... To put all this at risk in this way is simply not a sensible, mature or intelligent way of conducting ourselves if we want to remain a governing party. Tony Blair
In an earlier statement, Mr Blair said: "I had been intending to dismiss Tom Watson... To sign a round robin letter which was then leaked to the press was disloyal, discourteous and wrong."
Sadly, I feel that your remaining in office no longer serves the best interests of the party or the country...
Khalid Mahmood MP
We believe you have not ended the uncertainty over when you intend to leave office, which is damaging the party...
Wayne David MP, Caerphilly; Ian Lucas MP, Wrexham; Mark Tami MP, Alyn & Deeside; David Wright MP, Telford
Resigning from a Labour Government of whose achievements I am so proud is a matter of the utmost regret. However... I no longer believe that the party and the Government can renew itself in office without urgently renewing the leadership.
Iain Wright MP, HartlepoolReuse content