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Last Updated: Tuesday, 11 July 2006, 04:42 GMT 05:42 UK
Australia hit by leadership row
Treasurer Peter Costello talks to reporters 11th July
Some Howard supporters say Mr Costello should resign
Australian politics has been rocked by a leadership feud between Prime Minister John Howard and Treasurer Peter Costello.

On Monday the two men publicly contradicted each other over an alleged pledge by Mr Howard to hand over power.

The former allies faced each other at a Cabinet meeting on Tuesday, for the first time since the row erupted.

Mr Howard and Mr Costello have dominated Australian politics, and the Liberal Party, for the past decade.

The treasurer has made no secret of his desire to lead the country, but until now has always backed Mr Howard's leadership and remained silent on rumours of any private agreement.

In an editorial on Tuesday, the Australian newspaper declared the rift between the two men as the "end of an era", while the Sydney Morning Herald described it as a "power marriage on the rocks".

'No deals made'

Mr Costello said on Monday that 12 years ago, Mr Howard had promised he would hand over the leadership midway through his second term in office.

My parents always told me if you have done nothing wrong, you have got nothing to fear by telling the truth
Peter Costello
"He told me that he intended to do one-and-a-half terms as prime minister and then he would hand over.

"I did not seek that undertaking, he volunteered, and I took him at his word. Obviously that did not happen," Mr Costello told reporters.

But Mr Howard denied ever making such an agreement. "The situation is very simple, there were no deals made," he said.

The row continued on Tuesday, with Mr Howard saying: "The leadership of the Liberal Party is not my plaything, it's not Mr Costello's plaything, it is the unique gift of the 100 men and women of the federal parliamentary Liberal Party."

Mr Costello countered that the public was entitled to know Mr Howard had made a pledge he had not kept.

"My parents always told me if you have done nothing wrong, you have got nothing to fear by telling the truth," he told reporters. "I have told the truth."

Several MPs have now called for Mr Costello to either challenge Mr Howard for the leadership of the Liberal Party, or resign his post as treasurer.

Long-standing PM

Mr Howard is currently in his fourth term in office, and is Australia's second-longest serving prime minister.

At one stage, he said he would consider retiring on his 64th birthday. Mr Costello, now 48, would have been his likely successor.

But the veteran politician, who turns 67 later his month, changed his mind in 2003. He now says he will stay leader of the Liberal Party as long as his party is behind him.

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