Downing Street moved to quash speculation that he would announce he is quitting next Tuesday . . . the 10th anniversary of Labour's election to power . . . in a bid to rescue the party ahead of the polls. "That report is wrong, " said Blair's official spokesman.

During a visit to Poland, Blair said: "I never discuss these issues at all, but I wouldn't hold your breath for that story." The prime minister, who has the lowest opinion poll rating as a Labour leader since Michael Foot in 1983, has told allies that he is taking the "hits" with him after the local elections, to protect Gordon Brown from more damage. But Thursday's predicted losses threaten to provoke backbiting from Brown's friends who accuse Blair of clinging on to power too long. "If we could have got him out last September, we would have had a better chance, " said one.

Labour are likely to lose control of the Scottish Parliament and possibly the Welsh Assembly, while Tory gains are expected in town halls across England.

Some of Blair's closest friends fear the local elections will show Labour's decline is now so great it will lose the next general election under Brown. Blair will endorse the Chancellor when he announces to the Cabinet he is standing down.

He will remain prime minister for seven weeks, enabling him to see through the June EU and G8 summits. His remaining weeks in office are seen as a "farewell tour" but the Brown camp are planning to hit the ground running after Thursday's setback with priorities for the run-up to the general election, including the forthcoming energy white paper.

The chance of a left-wing challenge to stop a "coronation" of Brown without a contest has increased after a deal was reached between the two candidates from the left . . . former environment minister Michael Meacher and Campaign group chairman, John McDonnell . . . that only one of them would stand. However, they are still squabbling over who has the best chance to get the required 44 nominations by MPs to stand against Brown.

McDonnell told Meacher he does not believe he has more than a handful of supporters and should back down. But Meacher insists he has 24 signed nominations, making him the main challenger.

This will not be resolved until shortly before nominations open, probably on Monday 14 May, and they only have three days to make an effective challenge with a seven-week contest.

Brown is planning to go on a national tour, even if he is not challenged, while the contest for the deputy leadership is fought out on the hustings.

Meacher accused the Brown camp of trying to block a challenge by "spinning" canvas figures to show he could not get the required nominations to stand. "They're trying to block a contest at all, which I think is very much against the interest of the electorate of the Labour Party and Gordon Brown himself, " Meacher said.

McDonnell said: "For the last three months we have been trying to get Michael Meacher to sit down and say that whoever gets the highest number of MPs goes forward. We sat him down and he agreed to that. But we have been here before and we hope we adhere to the deal."