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OTTAWA (Reuters) - The Liberals will shift away from the left and name former Harvard professor Michael Ignatieff to lead the party against the Conservative government after the Liberals suffered a crushing defeat at the polls in October.
The path cleared for Ignatieff to become leader of Canada's main opposition party on Tuesday, when the last of his rivals bowed out of the race to succeed Stephane Dion, who had moved the Liberals to the left when he took the party over in 2006.
Bob Rae, who is also on the left of the party, pulled out after he said it became clear he did not have as much support as Ignatieff.
"We have a fine leader in Michael. We've got every prospect of forming a government and winning whatever elections may come, or forming a government with our coalition partners," Rae told a news conference held to announce his decision.
Rae had been and remained an advocate of joining the left-leaning New Democratic Party and the separatist Bloc Quebecois in bringing down the minority Conservatives and installing a Liberal-NDP coalition government.
The three parties had signed an agreement to do just that a little more than a week ago, but Ignatieff subsequently said a vote against the government should not be automatic and the party should wait to see what is in the government's budget when it is presented on January 27.
The coalition idea fell flat with the Canadian public and boosted the Conservatives' support to the extent that they might win a majority government if an election were held now.
Conservative Prime Minister Stephen Harper reached out to the next Liberal leader, offering to sit down with him to find common ground on the economy and saying it was too soon for Canada to hold another election after the October 14 vote.
"You can have it a couple years from now. For now, I think the big national parties should be working together to fix the economy, and we're more than willing to do that," Harper told CBC television.
The opposition says the government has failed to address the economic difficulties facing the country, and lost the confidence of the House of Commons through partisan maneuverings, but Ignatieff has been more cautious in calling for the Conservatives to be brought down and replaced by a Liberal-NDP coalition.
Under Dion, the Liberals had often leaned more to the left on issues such as taxation, foreign policy and the environment, leaving the Conservatives free to woo a larger chunk of the central political spectrum than before.
Ignatieff is likely to try to recapture some of that center ground. He is also a more formidable campaigner than Dion, eloquent in both English and French and able to focus more on the big picture than the academic-style detail that Dion delighted in.
Canada's political landscape has changed with breathtaking speed in recent days, moving from relative political peace less than two weeks ago to the possibility of a coalition taking over last week and a suspension of Parliament until late January.
Developments over the leadership of the Liberal Party further intensified the turmoil. Dion had first said he would stay on till a leadership convention in May but bowed to pressure on Monday and said he would step down as soon as a replacement was chosen.
Early on Tuesday morning the party said it would try to choose an interim leader by December 17, consulting the caucus in Parliament and other senior members, and by early afternoon Rae announced he had quit the leadership race.
Formally, Ignatieff is likely to be endorsed by the caucus on Wednesday and then the Liberal national executive will appoint him interim leader by next Wednesday. The convention in May would then endorse him as leader.
Ignatieff will have to balance the pressures within the Liberal from those who urge caution against those, like Rae, who think Harper has to be replaced now on the grounds that he undermined democracy by successfully seeking to suspend Parliament and that he is not doing enough to boost the economy.
"Those are two good reasons to say, 'Time's up, chum,' and that's what I think we should be saying to Mr. Harper, and I hope very much we can stay that course," Rae said, adding that he did not want right-wing Conservatives running his country.
Editing by Rob Wilson