UK's Brown under pressure as another minister quits

LONDON (Reuters) - Prime Minister Gordon Brown's political future was in doubt on Wednesday with party rebels said to be campaigning for him to quit after a second minister resigned before an expected rout in European and local polls.

Brown faced opposition taunts in parliament that his government was in "meltdown" after Communities Minister Hazel Blears decided to quit a day before Thursday's elections.

Rebels within Brown's ruling Labour Party began circulating a draft email calling on Brown to resign, according to several media reports. A Labour politician told Reuters he understood such a letter was in the works.

"We believe that in the current political situation, you can best serve the Labour Party and the country by stepping down as party leader and prime minister," the email said, according to Sky News.

The BBC reported that the rebels plan to send a message more widely -- possibly on Friday -- to gauge the appetite for a challenge to Brown, who replaced Tony Blair mid-term in 2007 after serving as finance minister for a decade.

Hard-hit by a scandal over lawmakers' expenses, Labour trails the opposition Conservatives by up to 20 points with a parliamentary election due by mid-2010. Brown has pinned any hope of bouncing back on a swift improvement in Britain's shrinking economy.

Tony Travers, politics professor at London School of Economics, said: "It all adds up to a hemorrhaging of authority in the Brown government."

Blears's resignation followed a similar move by Britain's first female interior minister, Jacqui Smith, and pre-empted a widely expected cabinet reshuffle.

Blears and Jacqui Smith are the highest profile casualties of disclosures about outlandish, taxpayer-funded expenses claims made by members of parliament at a time when recession is forcing hundreds of thousands out of work.

Both had been tipped for the axe in any reshuffle but the timing of Blears's departure 24 hours before the elections was particularly wounding for Brown. Two junior ministers have also indicated they plan to quit in the reshuffle.

EARLY ELECTION?

Speaking at a rowdy session in parliament, Brown rejected calls from the two main opposition leaders to call an early parliamentary election that could end Labour's 12-year grip on power.

Brown said he was focusing on cleaning up the expenses scandal and trying to pull Britain out of its deepest recession since World War Two.

His reshuffle, which could come as early as Friday, had been seen as an opportunity to revive his fortunes. But analysts said the resignations of Blears and Smith would dampen its impact.

The reshuffle is a dangerous time for Brown because it could bring discontent with his leadership into the open.

Any change of leader would be certain to add to the clamor for a parliamentary election to replace the discredited lower house. A growing number of MPs have said they will not stand for re-election after getting caught up in the expenses scandal.

Health Secretary Alan Johnson, a former postman and union leader, seen as the most likely successor as prime minister, said Brown was the right man for the job.

"He is doing the job, he is doing it under difficult circumstances," Johnson said. "There is absolutely no one that could do that job better."

If Brown weathers the storm, he is likely to wait until next May before calling an election.

There are signs that Brown's efforts to revive the economy, which shrank at its sharpest rate since 1979 in the first three months of this year, are working.

A highly regarded economic survey showed Britain's dominant services sector returned to growth last month, fuelling government hopes that its forecast of a recovery by the end of the year might be met.

Labour has faced the brunt of voter anger against many MPs who have milked the allowances system, claiming from taxpayers the cost of everything from duck houses to cleaning a moat.

Blears has agreed to pay more than 13,000 pounds ($21,000) in tax on the sale of a property.

Smith charged taxpayers for her husband's rental of two pornographic movies and declared a rented room in her sister's London home as her main residence, claiming nearly 23,000 pounds last year for her constituency home.

(Additional reporting by Adrian Croft, Kate Kelland, Keith Weir, Peter Griffiths and Luke Baker; Editing by Charles Dick)