Gordon Brown could be asked to stand down as Labour leader in the new year but allowed to stay as Prime Minister until the general election, which Labour would fight under a new leader.
The astonishing plan is being discussed by senior Labour figures, who say it would boost the party's election prospects without humiliating Mr Brown. The new Labour leader would take part in the three TV election debates with David Cameron and Nick Clegg announced this week.
But allies of the Prime Minister last night dismissed the idea as "mad" and insisted he would lead Labour into the election. They said the idea was "past its sell-by date" now Labour could force a hung parliament after narrowing the Tories' opinion poll lead.
Some Cabinet ministers are said to favour what is being dubbed "the Aznar option". In August 2003, Jose Maria Aznar, the Spanish Prime Minister, announced that he would retire from politics at the next election, proposed Mariano Rajoy as his successor and remained as Prime Minister until the March 2004 poll. Although his Popular Party lost, this was blamed on his response to the Madrid train bombings.
Labour supporters of the plan want Mr Brown to announce it in January, with a new party leader chosen in February. The most likely candidates would be David Miliband, the Foreign Secretary, and Alan Johnson, the Home Secretary, although a left-of-centre figure such as the backbencher Jon Cruddas might run.
A leadership contest before the general election would probably enable Labour to avoid the bloody fight expected if the battle were fought after an election defeat. "We could have a friendly contest, without blood on the carpet," said one senior Labour MP.
Another supporter claimed the "Aznar option" would enjoy the backing of 75 per cent of the party's members, MPs and ministers. "Everyone knows we are sleepwalking to disaster," he said. "Gordon's personal ratings are poor but people like our values and are not sure about the Tories. A new leader would transform the political scene. We'd have a chance of victory."
Backers said the latest plot to oust Mr Brown could enjoy Cabinet-level support – one of the stumbling blocks in the two failed backbench coups against him. "If four Cabinet ministers asked him to do it, he would have to agree," one MP claimed. Another said: "Gordon could leave with his head held high, and a 13-year record to be proud of. If he said he was going at the election, everyone would be happy. His personal ratings would soar. It would be like a neighbour from hell telling you he was moving house. You would say 'sorry' but you would jump for joy."
Supporters argue that "pre-announcing" Mr Brown's exit would enable him to avoid questions at the election about whether he would lead Labour for a full five-year term and beyond.
The idea is also modelled on Tony Blair's strategy when he faced demands by Brownite MPs to stand down in the autumn of 2006. Mr Blair, who originally wanted to stay until 2008, was ready to quit immediately, but allies including his chief strategist, Matthew Taylor, and Mr Miliband proposed a middle way – announcing that he would leave Downing Street in 2007. It worked.
Mr Taylor floated the "Aznar option" for Mr Brown on his blog – although he is not campaigning for it and keeps out of politics as chief executive of RSA, an independent charity and think tank.
Mr Taylor wrote: "Under this scenario Gordon Brown remains Prime Minister until the election but the Labour Party chooses a new leader to fight that election. In this way the internal contest within the party for its next leader is not about foisting a new Prime Minister on the country, but about choosing someone about whom the voters can make up their own mind."
One minister said: "It sounds too clever by half but I wouldn't entirely rule it out. Yet the problem remains – who is going to tell Gordon?" Lord Mandelson, the Business Secretary, is unlikely to do the deed. Friends say that he regards the "Aznar option" as "mad," saying: "The voters would be completely confused. They wouldn't know who was leading the party."
Yesterday Lord Mandelson's allies dismissed reports that he has fallen out with Mr Brown. They said he would not be an "assassin" because he returned to the Cabinet last year partly to heal the wounds from his long feud with Mr Brown.
However, there has been some tension between Lord Mandelson and Mr Brown in recent weeks. The Business Secretary was wary about the further rise in national insurance contributions in 2011 announced in the pre-Budget report, which would hit people on middle incomes. Like the Chancellor, Alistair Darling, Lord Mandelson would have preferred a rise in VAT. But that was strongly opposed by Ed Balls, the Schools Secretary and Mr Brown's long-standing ally. Mr Balls argued that Labour could accuse the Tories of secretly planning to increase VAT if Mr Darling rejected that option. Mr Brown backed Mr Balls rather than Lord Mandelson.
Labour probably won't go for the "Aznar option". But the fact it is even being discussed is a sign that, despite the mini-recovery in the polls, many Labour figures are still braced for election defeat.
Setting a precedent: Jose Maria Aznar
It was a cunning plan and it almost worked. José Maria Aznar, then prime minister of Spain, pre-announced his retirement ahead of the 2004 election, honouring a pledge not to seek a third term. But he carried on as prime minister for seven months.
His chosen successor, Mariano Rajoy, led the centre-right Popular Party into the election. Although Mr Aznar faced public opposition to his support for the Iraq war, opinion polls suggested his party was on course for victory.
Everything changed three days before polling day, when 10 bombs killed 191 people in the Madrid train bombings. The Aznar government continued to blame the Basque separatist group ETA even after evidence emerged that the attacks might have been the work of an Islamist group. There was an outcry over suspicions the government suppressed information, and the opposition Socialist party won the election. There is a recent precedent for a British prime minister not being leader of his party. In 1995, Sir John Major resigned as Tory party leader and challenged his internal critics to "put up or shut up". John Redwood stood against him but Sir John defeated him.Reuse content