Former Welsh Secretary Ron Davies will not stand as leader of the Labour party in the Welsh Assembly.

Paul Rowley in Westminster with the latest on the situation

This means that the former cabinet minister will not achieve his dream of becoming Wales's first 'prime minister'.

Mr Davies quit the cabinet after admitting a serious lapse of judgement which led to an incident on Clapham Common.

The announcement on Thursday night follows a series of crisis phone calls with his local party officials.

The assembly will go ahead but without Mr Davies

He was due to meet them face to face on Friday for the first time since he was mugged in mysterious circumstances on Monday night.

Pressure has been mounting on Mr Davies to quit, and Downing Street has been markedly reluctant to throw its weight behind him.

Mr Blair spoke to him on the telephone and told a cabinet meeting that he was saddened by his resignation.

Closing the net

But, despite denials that Downing Street was distancing itself from him, it was clear that the prime minister was eager not to get drawn into the affair.

Ron Davies is a novice Druid

The police are continuing to close the net on his alleged muggers, raising the likelihood that the truth will eventually come out - possibly in court.

Earlier, Welsh Euro-MP David Morris said he believed Mr Davies had no option but to quit.

"I think now, because of the rumours that are circulating, because it appears that he hasn't got confidence in his own people to share with them what he has done, I believe he is losing sympathy," he said.

Senior Labour backbencher Donald Anderson (Swansea East) expressed concern that the full details of what Mr Davies had done were still not known.

"He has told the prime minister certain facts. Whether those are the complete facts, we do not know," he said.

Brixton police station

Mr Davies's car was stolen after he was engaged in conversation with a stranger after dark and met up with two of the man's friends. He insisted he was a victim of a crime but gave no more explanation as to why he resigned.

Three people who were arrested in connection with the alleged mugging have been released on bail after being questioned by police. Mr Davies's care was found in a street in Brixton, South London.

Rhodri Morgan MP: "Ron Davies came to the right decision"

A fourth man has also been arrested in connection with the robbery but no details have yet emerged about the person, who was apprehended in the Brixton area of London.

It is also likely that Mr Davies will be questioned again by police over the incident on Clapham Common.

Mr Davies has been out of contact since his decision on Tuesday to quit the cabinet.