By Krisztina Than and Gergely Szakacs
BUDAPEST (Reuters) - Prime Minister Ferenc Gyurcsany told his Socialist party on Saturday he was ready to step aside so that a new government under a new leader could lead Hungary out of the economic crisis.
"Crisis management and further changes require wider political and social backing than today," Gyurcsany told a Socialist party congress.
"I hear that I am the obstacle to the cooperation required for changes, for a stable governing majority and the responsible behaviour of the opposition," he said. "...If so, then I am eliminating this obstacle now. I propose that we form a new government under a new prime minister."
A source close to Gyurcsany told Reuters he planned to organise a "constructive vote of no confidence" in parliament, in which at least one-fifth of all MPs propose a no confidence vote, a new prime ministerial candidate is picked, and parliament votes the incumbent out and his successor in.
This would not precipitate early elections.
"In a legal sense this will not be a resignation, but a constructive vote of no confidence, headed by the PM," the source said. "If there is a parliamentary majority, there could be a new prime minister by mid-April," he said, adding that Gyurcsany wanted to remain Socialist party president.
The global financial crisis has hit Hungary particularly hard and in October it had to take a $25.1 billion (17.3 billion pounds) International Monetary Fund-led rescue package to avert financial meltdown.
The source said talks with parliamentary parties would start next week to pick a new premier as soon as possible to pass much-needed budget measures with a stable majority.
Senior Socialist politician Monika Lamperth told reporters the Socialists would hold a party congress on April 5 to choose their candidate for the premiership.
Hungary's export-dependent economy is expected to contract by 4.5 percent this year, but some analysts say the recession could be deeper. The country's debts are rising and its currency fell to record lows against the euro earlier this month.
A DIFFICULT COMPROMISE
Gyurcsany has headed a minority Socialist government since last April when the Free Democrats quit the coalition.
Analysts said Gyurcsany decided to quit before European Parliament elections in June which his party is expected to lose, but that a compromise prime minister able to get majority support in parliament might be hard to find.
"The constructive vote of no confidence is a good idea, the question is who will vote through the new prime minister and the programme. That's the bottleneck... Both the Free Democrats and the Democratic Forum need party congress approval," said political analyst Zoltan Kiszelly.
"A new crisis management government would be better for the Socialists, this could give new impetus to the political left," he added.
In 2006 Gyurcsany became the first Hungarian prime minister since the end of communism in 1989 to hold on to power, but he sparked weeks of riots when he admitted on a leaked tape that he had lied about the country's poor finances to win the election.
Although Gyurcsany cut the budget deficit from above 9 percent of GDP in 2006 to 3.3 percent in 2008, he has failed to win public support for wider economic reforms and his popularity has plunged to record lows because of tax rises and spending cuts.
(Writing by Krisztina Than, editing by Tim Pearce)