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Yahoo! My Yahoo! Mail More Yahoo! Services Account Options New User? Sign Up Sign In Help Yahoo! Search web search Home Singapore Asia Pacific World Business Entertainment Sports Technology Africa Europe Latin America Middle East North America British PM falls on sword, seeking post-poll deal AFP - 45 minutes ago Send IM Story Print LONDON (AFP) - – British Prime Minister Gordon Brown announced Monday he will stand down, falling on his sword in a dramatic move which could see his Labour party keep power despite losing a deadlocked poll. Brown also announced the start of formal power-sharing talks between Labour and third party the Liberal Democrats, who have only officially been talking to the main opposition Conservatives since last Thursday's general election. In an immediate counter-bid from the Conservatives, chief negotiator William Hague offered a key concession to the Lib Dems in return for their support in a coalition. Lib Dem leader Nick Clegg, who emerged as kingmaker after no party won a clear majority, welcomed Brown's statement that he will quit by September as "important" in a possible power-sharing deal between the two parties. "I think his announcement could be an important element in the smooth transition towards a stable government," said Clegg, who indicated before the election he would not share power with Labour if Brown remained its leader. "It must have been a very difficult thing for him to say personally," added Clegg, whose centrist party is seen as politically closer to centre-left Labour than the centre-right Conservatives. Gordon Brown: end of a dream for flawed British premier Brown's statement marks the beginning of the end of his premiership and an act of political self-sacrifice, increasing the previously distant chance that Labour could extend its 13 years in office through a deal with the Lib Dems. If that happened, he could still stay on as prime minister for several months even though he led his party to second place behind David Cameron's Conservatives in the poll. "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," Brown said in a tense statement delivered in Downing Street. "As leader of my party, I must accept that that is a judgement on me. I therefore intend to ask the Labour party to set in train the processes needed for its own leadership election." Brown added that it "could be in the interests of the whole country to form a progressive coalition government" involving Labour and the Lib Dems. In Thursday's poll, the Conservatives won 306 seats in the 650-member House of Commons -- 20 short of an absolute majority of 326 -- followed by Labour on 258 and the Lib Dems on 57. Labour and the Lib Dems together would still not have enough seats for a clear majority, and would require help from smaller parties like Scottish and Welsh nationalists. Related article: The rush for British power-sharing deal Earlier in the day, hopes had been rising that Clegg's party could be about to announce a deal with the Conservatives, despite their radically different positions on issues like Europe, defence and reforming Britain's voting system. But Lib Dem negotiator David Laws said after a meeting with lawmakers that further "clarification" was still needed, the first indication of possible problems. Alastair Campbell, former premier Tony Blair's communications chief who also advised Brown during the election, said Brown's announcement would be seen as an olive branch from Labour to the Lib Dems. "There's a kind of urgency now, people have to start making decisions and I think forcing the pace will do all the parties a bit of good," he told the BBC. Foreign Secretary David Miliband is the odds-on favourite to replace Brown as Labour Party leader, according to odds from bookmakers updated minutes after the prime minister's statement. The key potential stumbling block to a deal between the Lib Dems and Conservatives is seen as electoral reform. The Lib Dems want to scrap the first-past-the-post system, which favours two-party politics and means smaller parties like theirs get fewer seats in the House of Commons. But most Conservatives strongly oppose such changes. In a clear Conservative counter-offer to the Lib Dems after Brown's bombshell statement, Hague said the Tories would promise a referendum on electoral reform, a key Lib Dem demand, if they entered a coalition. "In the interests of trying to create a stable, secure government, we will go the extra mile and we will offer to the Lib Dems in a coalition government the holding of a referendum on the Alternative Voting system," Hague said. "That's the choice that they will now have to make." 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