Suleymann Kufr, London
Guardian staff reporter

Michael Howard today resigned as leader of the Conservative Party, after leading the Tories to a third successive defeat.

Speaking outside Conservative Central Office in London, Mr Howard said, “It is vital for the party to reflect fully on the decision of the electorate and on the direction the Conservative Party must now take.  That direction should be the responsibility of a new leader who can build on the very substantial progress we, as a party, have made in the past eighteen months.”

It is eighteen months to the day since Mr Howard replaced Mr Ian Duncan Smith as Tory leader in what was a one horse race.

Mr Howard claimed that his party was “back in business” but he also spoke of the electoral mountain which it still has to climb.

He said, “I believe, as I think most of those involved also believe, that we fought a very good and effective campaign.  We did not win.  Nevertheless, we are back in business, which many people said was impossible eighteen months ago.  From here it is distinctly possible, if still difficult of course, for us to reduce the rest of Mr Blair’s parliamentary majority.  Whoever the party now chooses to lead that effort will have not only my complete support but, I am certain, a united party behind him.”

Mr Howard will stand down when the party has elected a successor.

Speaking outside 10 Downing Street today, Tony Blair praised Mr Howard’s “energy” and “determination”.  “I wish him well,” he added, “He has been a formidable opponent in the House.”

At the latest count the Tories have won 242 seats, gaining seventy-six more constituencies than the party’s 2001 total.  Mr Howard conceded defeat to the prime minister, Tony Blair, but said Labour was “a divided party that had been re-elected with no public enthusiasm”.

His comments came after senior Conservative figures, including the shadow Home Secretary, David Davies, urged a period of reflection.

Mr Davies is now the bookmakers’ 11-10 hot favourite to succeed Mr Howard.  The party Chairman Dr Liam Fox is installed at 5/1 with talented youth represented by David Cameron at 7/1.  Odds of 10/1 were offered on Shadow Chancellor Oliver Letwin and Shadow Foreign Secretary Michael Ancram, and 16/1 for Shadow Health Secretary Andrew Lansley.

Mr Davies today refused to be drawn on his prospects for the leadership, saying only “In the aftermath of the election and so soon after Michael’s resignation announcement I do not feel this is the time to discuss his succession.  That will come in due course.”

Baroness Thatcher spoke warmly of Mr Howard’s achievements during his brief spell as Tory leader.  She said, “I think he did a wonderful job, better than anyone thought possible.  Four years ago, when William Hague resigned, I said we will be back and so we are.  Now I am saying that in four year’s time we shall be back in government”.

She said Labour’s victory had been a “very disappointing result for the country” though she praised the Tory election campaign.

Mr Kenneth Clarke, a fellow minister to Mr Howard in both the Thatcher and Major governments, also paid tribute to the outgoing Tory leader.  But he cautioned that it would take more than another change of leader to oust Labour at the next opportunity.

He said, “I pay tribute to Michael Howard’s political skills.  He had the wisdom to realise that the public is not as gripped by the Europe issue as politicians are.  I think the agenda on which we fought the election was the public’s agenda.  The public is interested in health, education, transport and crime, and we talked about all those.  Michael will leave us far stronger than he found us.  But I do caution his successor against the attractions of a “one-more-heave” mentality.  We must go further in being relevant to the whole of the electorate.  The Conservative party must look more like the country we wish to lead.”

Sources close to Mr Howard have suggested that his decision to retire now has less to do with the election result than with the need to give whoever will lead the party into the next election time also to prepare for next year’s referendum on the European Constitution.  The polls consistently suggest that the No campaign will win comfortably, a highly favourable launch-pad for the new Tory leader.

John Prescott, Labour Deputy Leader, said he “couldn’t understand the rush” with Mr Howard’s decision.  He said, “They might as well hang on to him because in three years time they will go and ditch whoever it is they select now and ask Michael Howard back again.”

It is rumoured that Mr Howard might retire from politics altogether within the next twelve months.  Although he has always been regarded within Westminster as one of those MP’s singularly devoted to political life he is thought to have several projects outside politics that he wishes to pursue.  He was first elected Member of Parliament for Folkestone and Hythe in 1983.