By Kim Ghattas
BBC News, Washington
The race to the White House has become much more focused for both Democrats and Republicans, with two major candidates dropping out.
John Edwards has run a campaign based on ending poverty in the US
While Rudy Giuliani passed on his votes to his long-time friend John McCain, John Edwards has left everybody guessing about who out of Hillary Clinton or Barack Obama will most benefit from his withdrawal.
With his wife Elizabeth and his three children by his side, John Edwards said that he was quitting the Democratic race because he felt it was "time to step aside and let history blaze its path".
Mr Edwards made the announcement standing on a podium in the Lower Ninth Ward in New Orleans, an area devastated by Hurricane Katrina in 2005.
This is where he launched his campaign more than a year ago, with a focus on helping working class Americans and a strong anti-poverty message.
He fought a tough campaign but was unable to compete with the well-funded mega-machines of his chief rivals for the right to run for president for his party, Hillary Clinton and Barack Obama.
He has lost all four nominating contests so far, from Iowa to South Carolina - his native state - but could perhaps turn into the kingmaker of the Democratic race for nomination.
"We do not know who will take the final steps to 1600 Pennsylvania Avenue. But what we do know is that our Democratic party will make history," he said, as he called on Democrats to be strong and unified.
Endorsement in the balance
The former North Carolina senator reportedly took his decision in the past 24 hours, surprising even some insiders after he had pledged several times he would stick to the campaign until the Democrats' national convention in August.
It is not yet clear to whom Mr Edwards's supporters will gravitate
Advisers said the decision had nothing to do with the health of his wife Elizabeth, who is battling against incurable breast cancer.
The millionaire lawyer said he had already spoken to Mrs Clinton and Mr Obama and had called on both of them to make fighting poverty central to their campaign.
But he did not endorse either - and there is no indication about whether he will make a move in the coming days.
Mrs Clinton and Mr Obama both praised Mr Edwards after he announced he was quitting and are now likely to court him heavily ahead of Super Tuesday on 5 February, when more than 20 states across the US vote to choose their candidates with 1,681 delegates at stake.
In what is now a very tight race between the two front-runners for the Democratic nomination, an Edwards endorsement could make a crucial difference.
Until then, it is not totally clear how voters will react.
A former senior strategist for Mr Edwards said he would lobby against his former client endorsing Mrs Clinton, the senator for New York.
"I'm going to do everything in my power to make sure he does not endorse Hillary Clinton," Dave "Mudcat" Saunders said on US television.
"I just don't think the Clintons have been a friend of my people out in rural America."
Robert Gibbs, communications director for Illinois Senator Mr Obama, said voters now had an obvious path to take.
"As we go forward, what it means for the campaign is that change voters now have a clear choice," he said.
"Change versus more of the same becomes much more pronounced in this race, and I think Edwards voters have a great home in Barack Obama."
But according to a recent poll, four in 10 Edwards supporters said Mrs Clinton was their second choice, while a quarter of voters said they would go for Mr Obama.
No bridges burned
One impact of Mr Edwards's withdrawal will be the dispersing of some of his delegates, which he won in Iowa - where he came second - New Hampshire and South Carolina.
Mr Edwards may hope for a position in a new Democratic administration
However, it remains unclear how many will go to Mrs Clinton and how many to Mr Obama, not least because even if he endorses another candidate, all his delegates will not be obliged to vote the same way.
The exact numbers that go to each of his rivals may only become apparent at the Democratic Party's national convention in August.
Whether the race between Mrs Clinton and Mr Obama remains so close at that time that they become a factor in deciding the nomination remains to be seen.
Mr Edwards may also decide to stay out of the race and not back either candidate, so as not to burn any bridges in light of a future political role.
While he has clearly said he is not interested in running as a vice-president, after his failed 2004 bid with Senator John Kerry, the former North Carolina senator may well want a seat in a Democratic cabinet.
'White House hero'
For his part, former New York Mayor Rudy Giuliani made his announcement at the Ronald Reagan presidential library in California ahead of a Republican debate which was to go ahead without him.
Mr Giuliani said he would do all he could to support John McCain
In a rather light-hearted press conference, he said that while he thought he had the qualities of a president, voters had obviously decided differently.
His decision came after he ended up in third position in Florida, the state on which he had pinned all his hopes, in a high-risk and very expensive strategy.
"John McCain is the most qualified candidate to be the next commander-in-chief of the United States," said Mr Giuliani.
"He's an American hero and the US could use a hero in the White House," he added, referring to McCain's five years in a prison during the Vietnam War.
The withdrawal of Mr Giuliani, once a front-runner himself, leaves the veteran Arizona senator facing a strong challenge from Mormon candidate Mitt Romney.
Former Arkansas Governor Mike Huckabee is still formally in the Republican race but his lack of campaign money and limited appeal beyond Christian conservatives has left him trailing. He is counting on doing well in states in the South on Super Tuesday.
Mr McCain could now get the votes that would have gone to Mr Giuliani in more moderate delegate-rich states which will vote next week, such as California, New York and Illinois.
But the endorsement from Mr Giuliani, whom many Republicans criticised for his attitudes on social issues like abortion, could also work against Mr McCain on a national level, as he faces accusations of not being conservative enough.