Kibaki (l) promised Raila (r) the prime minister's position

The announcement follows a decision by delegates to adopt a draft document reducing the president's powers.

Those closest to President Mwai Kibaki say creating a powerful prime minister in competition with the president would be "both nonsensical and dangerous".

In spite of its withdrawal, the government says it is committed to a new constitution within three months.

But what began as a vote-winner during the election 15 months ago has now turned into a deeply divisive issue for the fractious coalition government.

Vice president Moody Awori said the government was angry that the conference failed to discuss a consensus report.

"We felt very sad that the various political leaders were not given a chance to address the plenary in support of the consensus on the executive as had been agreed," said Mr Awori.

'High handed'

Some ministers have already made it clear they want parliament to amend the draft document which the conference produces.

CONSTITUTIONAL PROPOSAL Elected president appoints PM PM appoints cabinet PM leads government and chairs cabinet President remains head of armed forces

But the BBC's Grant Ferrett in Nairobi says that could prove dangerous.

He says it is far from clear that the coalition government could count on the support of the majority of members of parliament to back it in any vote to maintain the president's powers.

The chairman of the review commission Prof Yash Pal Ghai announced that draft constitution had been adopted by more than 600 delegates who had converged at the conference.

The document will be officially presented to the attorney general at the end of the week and later to parliament for adoption.

Mr Awori signalled that the government will vote against the draft report in parliament but would not interfere with the review process which could lead to a referendum.

Dissident members of the ruling coalition, mainly from the Liberal Democratic Party (LDP), backed the creation of a prime minister's position and have an upper hand at the conference and in parliament.

They appear to have the support of the opposition.

Public Works Minister and LDP leader Raila Odinga is viewed as the most likely candidate for the new post of prime minister.