"What's important is that Turkey does not stay without a government and that is what has happened," he told reporters.

The country has not had an established government since November when parliament toppled conservative Mesut Yilmaz on accusations of corruption. Mr Yilmaz has stayed on as caretaker prime minister.

Mr Erez's decision seems to clear the way for the veteran secularist Bulent Ecevit to become prime minister again 25 years after he first held the post.

Potential rival

Bulent Ecevit: Promises early general election

During the two weeks in which he tried to form a government, Mr Erez appeared confident about his chances of success. But in the end he was out-manoeuvred by his former party leader Tansu Ciller.

She saw him as a potential rival in conservative politics and she chose to throw her weight behind the centre-left leader Bulent Ecevit instead.

Mr Ecevit now has the support of a clear majority of deputies in parliament and it is expected that the president will ask him to form a government as soon as possible.

It has been more than 40 days since the out-going government lost a vote of confidence and bickering among the rival political leaders has been intense.

Military fears

The BBC Ankara Correspondent Chris Morris says there is a feeling that the arguments have now come full circle and Mr Ecevit is the only candidate left standing.

Anxious to avoid instability, the Turkish military has insisted that the stalemate must come to an end.

The generals fear that political Islamists - the largest group in the parliament - could be the ones to benefit over the long term.