David Davis, the Shadow Deputy Prime Minister, will run for the Tory leadership if Iain Duncan Smith is ousted from the post next year, it emerged yesterday.
Although Mr Davis will not encourage or play any part in moves to sack Mr Duncan Smith, he will enter the race if the Tory leader stands down or is deposed by losing a vote of confidence among Tory MPs.
Mr Davis would prefer not to stand for the leadership until after the next general election, where the party faces the grim prospect of a third heavy defeat by Labour. He also faces a tough challenge from the Liberal Democrats in his Haltemprice and Howden constituency.
However, the former party chairman has already come under pressure from MPs and party activists to run for the leadership and has decided that he would enter the race if there is a vacancy.
The news is a setback for Kenneth Clarke, the former Chancellor, who is seen as the most likely successor to Mr Duncan Smith. It is likely to scupper the plan by Lord Heseltine for Tory MPs to impose Mr Clarke as leader without allowing the ballot of the party's 350,000 provided for under the Tories' rules.
One ally of Mr Davis said yesterday: "There is a lot of opposition to Ken Clarke, so there would definitely be a contest. If David didn't run, then Michael Howard [Shadow Chancellor] or Liam Fox [Shadow Health Secretary] would be the right- of-centre candidate. So David will go for it."
Supporters of Mr Davis believe he would have a very strong chance of winning. Private polling among grassroots Tories during last year's leadership contest suggested he would have become leader if party members had been allowed to vote for all five candidates. Under the rules, Tory MPs choose a shortlist of two names for the members' ballot and Mr Duncan Smith beat Mr Clarke in last year's run-off.
Despite Mr Duncan Smith's dramatic "unite or die" plea to his party last month, speculation that he might be ousted after next May's local elections has been fuelled by Lord Heseltine's call – and poor opinion poll ratings.
Yesterday, Mr Davis joined forces with Mr Duncan Smith to launch plans, first announced during the Tory conference in October, to allow more than a million tenants of housing associations to buy their homes. The money raised would be used to buy or build new housing for low income groups.
Unveiling a consultation document, Mr Davis said: "We want to engage the community, particularly housing groups and tenants of council and housing association dwellings, on making the system better."
Mr Duncan Smith said the Tory plans would tackle a "vicious housing circle." He said: "People are encouraged to remain in social housing for life by life-long rental subsidies. Higher prices are making private housing difficult to buy. No wonder fewer tenants are leaving houses, and not enough new social housing is being built to keep up with demand.
"While the Labour Party talks of cutting the right to buy, we are saying: increase it. Labour wants to limit a popular and successful programme."