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Brown has just made a statement on the steps of Downing Street indicating his intention to resign.

He said he would instruct his party to begin proceedings for a
leadership contest for the Labour Party, aiming to have the position
filled by their conference in October. He said: "I will play no part in that contest, I will back no individual candidate."

However, with respect to the current negotiations, he announced that whilst he understands that Nick Clegg wishes to continue his dialogue with the Conservatives, he now wants also to take forward discussions with the Labour Party. Brown said that he wants to respond positively to this and that the negotiating process was being formalised.

> WATCH Brown's statement in full

6.30pm Here is the full text of Brown's statement:

"We have a parliamentary and not presidential system in this country
and 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 that 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 in the
European finance ministers meeting in Brussels. This morning I have 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 that 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’s 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 can 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

"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 judgement 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 cerate 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."

Jonathan Isaby

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