"As I said on Friday, with no party able to command a parliamentary majority arising from the General Election, my constitutional duty as Prime Minister is to ensure government continues while parties explore options for forming a new administration with majority support in the House of Commons.
"The business of government has continued, including concerted action in Europe today to avert the financial crisis in the euro area.
"Alistair Darling, the Chancellor, spent much of his time yesterday at the European finance ministers' meeting in Brussels.
"This morning, I had conversations with the president of the European Council, the managing director of the International Monetary Fund and the president of the European Central Bank.
"I have said I would do all I could to ensure that a stable, strong and principled government is formed, able to tackle Britain's economic and political challenges effectively.
"As we know, the Liberal Democrats felt they should first talk to the Conservative Party. Mr Clegg has just informed me that, while he intends to continue his dialogue that he has begun with the Conservatives, he now wishes also to take forward formal discussions with the Labour Party.
"I believe it is sensible and it is in the national interest to respond positively.
"The Cabinet will meet soon. A formal policy negotiating process is being established under the arrangements made by the Cabinet Secretary, similar to the negotiations between other parties.
"The first priority should be an agreed deficit reduction plan to support economic growth and a return to full employment.
"I know that both parties recognise the importance of ensuring economic stability in the markets and protecting Britain's standing and both are agreed on the need for a strong and full deficit reduction plan over the coming years.
"There is also a progressive majority in Britain and I believe it could be in the interests of the whole country to form a progressive coalition government.
"In addition to the economic priorities, in my view, only such a progressive government could meet the demand for political and electoral change which the British people made last Thursday.
"Our commitments on a new voting system for the House of Commons and for the election of the House of Lords are clearly part of this.
"I would however like to say something also about my own position.
"If it becomes clear that the national interest, which is stable and principled government, can be best served by forming a coalition between the Labour Party and the Liberal Democrats, then I believe I should discharge that duty to form that government which would, in my view, command a majority in the House of Commons in the Queen's Speech and any other confidence votes.
"But I have no desire to stay in my position longer than is needed to ensure the path to economic growth is assured and the process of political reform we have agreed moves forward quickly.
"The reason that we have a hung Parliament is that no single party and no single leader was able to win the full support of the country.
"As leader of my party, I must accept that that is a judgment on me.
"I therefore intend to ask the Labour Party to set in train the processes needed for its own leadership election.
"I would hope that it would be completed in time for the new leader to be in post by the time of the Labour Party conference.
"I will play no part in that contest. I will back no individual candidate.
"I believe that the British people now want us to focus on the economy, the continuing fight against terrorism, the terrorist threat to our country.
"They want us to continue to pursue the economic recovery, and I will do so with my usual vigour and determination, and I will do all in my power to support the British troops whose service and sacrifice create a debt of gratitude we can never fully repay.
"And I believe on Thursday the country was also telling us that they want a new politics, and that the political reforms we seek will help deliver that change.
"I now intend to facilitate the discussions that the Liberal Democratic party has asked for.
"Thank you very much. As you will understand I will take no questions this evening. Other discussions can be had later.
"Thank you very much."
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