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The process of forming a new government may be resolved in the next 24 hours, according to a senior Liberal Democrat source who said it was “crunch time”.

The Lib Dems have held talks with the Tories and Labour in a bid to form an alliance which could run the country.

Gordon Brown, whose presence in Downing Street was seen as harming Labour’s chance of a deal, has announced he will step down as party leader by September.

No party won a Commons overall majority at Thursday’s general election.

Labour and the Tories are both trying to woo the Lib Dems with promises on electoral reform as the battle form a new government reaches its critical phase.

A meeting of Lib Dem MPs continued beyond midnight and ended with no firm decisions taken, the BBC understands.

Following Mr Brown’s announcement that he was standing down as Labour leader, the party’s deputy leader Harriet Harman became the first senior figure to say she had no plans to stand in a leadership contest.

The Tories, who won the most seats and votes in the election, reacted to Mr Brown’s decision by making a “final offer” to the Lib Dems of a referendum on changing the voting method to the Alternative Vote (AV) system.

Labour are offering to put the AV system into law and then hold a referendum asking voters to approve it.

BBC political editor Nick Robinson said Mr Brown’s resignation was an audacious bid to keep Labour in power – and the prime minister himself in power for a limited period – and that Tory MPs would be furious.

In his statement, Mr Brown said Britain had a “parliamentary and not presidential system” and said there was a “progressive majority” of voters.

He said if the national interest could be best served by a coalition between the Lib Dems and Labour he would “discharge that duty to form that government”.

Mr Brown said no party had won an overall majority in the UK general election and, as Labour leader, he had to accept that as a judgement on him, before adding that he hoped a new leader would be in place in time for the Labour Party conference in September.

He has urged potential candidates, such as Foreign Secretary David Miliband and Schools Secretary Ed Balls, not to launch their campaigns yet.

Mr Brown said Lib Dem leader Nick Clegg had requested formal negotiations with Labour and it was “sensible and in the national interest” to respond positively to the request.

It emerged earlier that the Lib Dem negotiating team, who have held days of talks with the Conservatives, had also met senior Labour figures in private.

But it was understood that one of the stumbling blocks to any Labour-Lib Dem deal was Mr Brown himself.

Mr Clegg said he was “very grateful to David Cameron and his negotiation team” and they had had “very constructive talks” and made a “great deal of progress”.

But he said they had not “reached a comprehensive partnership agreement for a full Parliament” so far and it was the “responsible thing to do” to open negotiations with the Labour Party on the same basis, while continuing talks with the Tories.

“Gordon Brown has taken a difficult personal decision in the national interest,” he said.

“And I think without prejudice to the talks that will now happen between Labour and the Liberal Democrats, Gordon Brown’s decision is an important element which could help ensure a smooth transition to the stable government that everyone deserves.”

The Lib Dems have long campaigned for a change to the voting system – something which the Conservatives have strongly opposed.

But speaking after a meeting of Conservative MPs, following Mr Brown’s statement, shadow foreign secretary William Hague said they were prepared to “go the extra mile” on electoral reform – and offer a referendum on switching to AV in return for a coalition government.

He said the Lib Dems had to choose whether to back them or a government that would not be stable – because it would have to rely on the votes of other minor parties – and would have an “unelected prime minister” for the second time in a row.

He also said the Labour offer was for a switch to the AV system, without a referendum, which he believed was undemocratic. The BBC understands, from Lib Dem sources, that the Labour offer is legislation to introduce AV, followed by a referendum on proportional representation.

Under AV no candidate is elected without at least 50% of the vote, after second preferences are taken into account, but it is not considered full proportional representation.

Meanwhile, BBC political correspondent Iain Watson said he understood some cabinet members were sceptical about the idea of a “progressive alliance” with the Lib Dems and were concerned it would look bad.

Labour backbencher Graham Stringer said he did not believe a coalition with the Lib Dems would work and could damage the party: “I don’t think it makes sense in the arithmetic – the numbers don’t add up.”

The Tories secured 306 of the 649 constituencies contested on 6 May. It leaves the party short of the 326 MPs needed for an outright majority, with the Thirsk and Malton seat – where the election was postponed after the death of a candidate – still to vote.

Labour finished with 258 MPs, down 91, the Lib Dems 57, down five, and other parties 28.

If Labour and the Lib Dems joined forces, they would still not have an overall majority.

With the support of the Northern Irish SDLP, one Alliance MP, and nationalists from Scotland and Wales they would reach 328, rising to 338 if the DUP, the independent unionist and the new Green MP joined them.

Coalition scenarios.

Pakistan’s ambassador to Iran has been injured in an attack by an Afghan on his car in Tehran, officials say.

A foreign ministry spokesman quoted by al-Alam television said the suspect had already been arrested.

The ambassador was taken to hospital after the incident in the Iranian capital and it is not yet known how seriously hurt he is.

Two of his bodyguards were killed, according to a report on Dubai’s al-Arabiya TV.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

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Play is due to start at 1800 BST (TMS coverage begins at 1745)

1738: Right, I promised you the permutations. It’s simplest for India – anything less than a win and they’re eliminated. Even if they win, they then need Australia to beat the West Indies – and also hope they have the best net run-rate between themselves, Sri Lanka and West Indies.

If Sri Lanka win (or if this match finishes a tie or no result), then they will go through if Australia win the late game or if that finishes a tie or no result. A Sri Lanka win coupled with a Windies win would see the top two from Australia, Sri Lanka and West Indies on net run-rate go through. But Sri Lanka also have a very faint hope of qualifying even if they lose and Australia win – although they would need a better net run-rate than India and West Indies. Confused? You will be…

1733: Here’s the toss – India’s Mahendra Dhoni has called correctly – and opts to bat first. They make three changes – Murali Vijay, Ravindra Jadeja and Zaheer Khan are replaced by Dinesh Karthik, Piyush Chawla and Vinay Kumar. Sri Lanka also make three changes – leaving out Dinesh Chandimal, Chanaka Welegedara and most surprisingly Ajantha Mendia in favour of Thissara Perera, Chinthaka Jayasinghe and Thilan Thushara.

1725: Afternoon, everyone – or should it be evening? Over on the lush, verdant island of St Lucia, it’s about 25 minutes past high noon for the four teams battling to grab the last two semi-final places in the ICC World Twenty20 – first up we’ve got Sri Lanka v India at 1800 BST, followed by West Indies v Australia under the lights at 2200 BST. I’ll go through the permutations in a minute about who has to do what to qualify.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

The man who stabbed 15-year-old schoolboy Thomas Devlin to death has been jailed for 30 years at Belfast Crown Court.

Gary Taylor, 23, Mountcollyer Avenue, Belfast was convicted of stabbing the teenager to death in August 2005.

His accomplice, Nigel Brown, 26, of Whitewell Road, was jailed for 22 years for his part in the killing.

At an earlier hearing in April, a judge had warned Taylor that he might never see freedom.

He told him that he would have "a long way to go" before convincing a parole board to release him.

Thomas Devlin and his friends were attacked as they walked home along the Somerton Road in the north of the city on a summer evening, having bought sweets in a local garage.

The schoolboy tried to run away from his attackers but was pulled off a wall and stabbed nine times with a knife.

Taylor was 18 years old at the time of the killing and his co-accused Nigel Brown was 22.

At the April hearing, the court was told that Taylor had deeply sectarian attitudes and a history of offending against members of the Catholic community

At an earlier hearing, the court was told that Taylor had carried the knife which is believed to have come from Brown’s kitchen.

During a lengthy trial, the question of whether the murder had been motivated by sectarianism was never introduced to the jury.

But on 30 April, Mr Justice McLaughlin referred to a pre-sentence report produced on Brown which indicated that sectarianism had in fact been the motive.

Taylor has 19 convictions, Brown has 72, for offences like assault, affray and riotous behaviour.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Scores of UK air passengers are facing further disruption from a volcanic ash cloud that has halted European flights.

Flights to and from parts of Spain, Portugal, Morocco and the Canary Islands have been affected after the countries closed their airspace.

British airports remain open, but both Ryanair and Easyjet said they had been forced to cancel dozens of flights.

Airlines and airports are urging passengers to check updated information before travelling to the airport.

London’s two main airports both reported a handful of cancellations – 14 arrivals and 10 departures at Gatwick, and seven arrivals and four departures at Heathrow.

A Gatwick spokesperson also said some transatlantic flights had been delayed by the ash.

Ryanair said it had cancelled flights to and from the Canary Islands, Faro and Madrid.

Flights to and from Granada, Jerez, Malaga, Seville and Tangier have also been cancelled.

Easyjet spokesman Andrew McConnell said the "vast majority" of its flights were operating normally.

Passengers travelling to and from Madrid, Faro, Funchal, Marrakesh and Tenerife should check their flight status before travelling, he said.

British airports operator BAA has also warned of delays to transatlantic services and cancellations by airlines.

British Airways and Virgin Atlantic are among the carriers whose passengers suffered long delays on Tuesday.

Last month, ash from the Eyjafjallajokull volcano shut down airspace across Europe for five days.

British tourism operator TUI Travel estimated the travel chaos caused by the volcanic ash cloud had cost the group £90m.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.