Paul Martin has already pledged to call an election later this year

Mr Martin said Belinda Stronach had quit the Conservatives and would vote with the government on a key motion.

Correspondents say the move all but assures Mr Martin of winning a crucial federal budget vote on Thursday.

Ms Stronach, 39, is to become the minister of human resources in Mr Martin's coalition.

She says she swapped sides because the Conservatives were risking national unity by joining forces with the Bloc Quebecois, which wants Quebec to become a separate state.

Deciding vote

Mr Martin's minority government has been beset by a financial scandal dating back to the 1990s.

Belinda's actions make the defeat of the government on Thursday much less likely Stephen Harper, Opposition leader Q&A: Political crisis

The Conservatives and the Bloc Quebecois say allegations of corruption and wrongdoing by the Liberals mean they no longer have the authority to govern.

Mr Martin - who has denied any knowledge of funds being channelled inappropriately - had wanted to wait until an inquiry into the scandal had been completed before calling elections.

But correspondents say he has accepted that Thursday's federal budget vote will effectively be a vote of confidence in his government and that, if he loses, an election would have to be called.

The defection of millionaire businesswoman Ms Stronach leaves the outcome of the vote in the hands of two undecided independent members of parliament.

If one voted for and one against the government, the result would be a tie with each side having 153 votes.

That would leave the deciding vote to the speaker of parliament, a Liberal.

Conservative leader Stephen Harper admitted the loss of Ms Stronach, who ran to lead her old party early last year, made it harder for the opposition to achieve its goal of early elections.

"Obviously Belinda's actions today make the defeat of the government on Thursday much less likely," he said, quoted by Reuters news agency.