Blair hints at Livingstone's return to the Labour Party

Tony Blair gave his strongest hint yet yesterday that Ken Livingstone might be readmitted to the Labour fold ahead of next year's mayor of London election.

Mr Blair has also been in secret talks with Nicky Gavron, the official Labour candidate, about her role. However, Ms Gavron, the former deputy mayor of London and the candidate selected by Labour members in the capital, is making it clear that she has no plans to step aside.

"I'm putting the finishing touches to my strong policy platform and am looking forward to the campaign," she said when he was confronted about the issue.

At Prime Minister's Questions, Mr Blair was asked by Andrew Mackay, Tory MP for Bracknell, whether he wanted Mr Livingstone or Ms Gavron to win the mayoral election next June. The Prime Minister replied: "I will of course support the Labour candidate."

Mr Blair's remark will fuel claims that he has already asked Ian McCartney, the party chairman, to find a way of allowing Mr Livingstone back into the party and installing him as Labour's candidate.

Ms Gavron believes that she can win the mayoral race and that Mr Livingstone will lose support if he drops his independence from Labour. The threat of legal action by expelled Labour members if Mr Livingstone is readmitted also makes any move to end his five-year ban risky.

A MORI poll recently put Mr Livingstone on 40 per cent, Steve Norris, the Tory candidate, on 27 per cent, Simon Hughes, the Liberal Democrat, on 16 per cent and Ms Gavron on 12 per cent.

Ms Gavron rejected the idea that she could come a "humiliating" fourth because her own polling indicated that she could overtake Mr Hughes by the end of the year. A senior Gavron source said: "The activists are not jumping up and down asking for Ken to be their candidate." Despite possible offers of a peerage and even ministerial job, Ms Gavron has won support as the only woman candidate and is determined to implement her ideas to combat poverty and improve the capital's environment and transport.

Although she was removed as Deputy Mayor by Mr Livingstone last year, Ms Gavron has sought to unite the Labour party by recommending that Labour voters use their second preference to back the Mayor.

Ms Gavron is understood to have met Mr Blair for half an hour on Tuesday. She said last night: "I can categorically deny that the Prime Minister asked me to step aside. He didn't." However, as party sources briefed that she had indicated that a deal was possible under the right terms and conditions, she was guarded about exactly what was discussed.

The Gavron camp maintain that while there have been vociferous supporters lobbying for Mr Livingstone's return, there are also substantial numbers of members who are opposed to him becoming Labour's candidate.

But backers of Mr Livingstone's return are threatening a so-called "nuclear winter" scenario under which Ms Gavron would be frozen out if she refused a deal. If she came fourth and undermined the Labour Party as a whole, she could be barred from having a chance to implement her own policies and from senior posts at the GLA.

No 10 is understood to be extremely worried at the damage a poor showing in the mayoral elections would do to Labour's standing in the capital as a whole, just one year before a likely general election.