According to the reports, British Prime Minister Gordon Brown, his Labor Party pummeled at the polls last week, said Monday he will quit as his party's leader by September.

The BBC has reported that Brown's announcement opened the way for his party to start formal negotiations with the Liberal Democrats to form a new government. The Liberal Democrats failed to reach an agreement with Conservatives, creating an opportunity for a ruling coalition with Labor once Brown agreed to step aside.

It was further reported that the Tories made a late offer to the Liberal Democrats to hold a referendum on voting system changes the party's leaders have sought. But the BBC said Labor leaders were believed to have offered the party legislation to put an alternative voting method in place immediately with a referendum later on a wider range of system changes.

Britain's national interests could be best served by a coalition between his party and the Liberal Democrats, Brown said in a statement. He said since Labor didn't win an overall majority, he had to accept that as voters' judgment of him. The Conservatives won the most seats in last week's elections, but not enough for an outright majority.

He further said, "I therefore intend to ask the Labor Party to set in train the processes needed for its own leadership election. I would hope that it would be completed in time for the new leader to be in post by the time of the Labor Party conference. I will play no part in that contest. I will back no individual candidate."

Brown "has taken a difficult personal decision in the national interest," Liberal Democrats leader Nick Clegg has said

Clegg further added, "And I think without prejudice to the talks that will now happen between Labor 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." (With Inputs from Agencies)