Budapest - Hungary's Socialist Party was divided in two on Friday evening over the nomination of Finance Minister Lajos Bokros for prime minister, the state news agency MTI reported.

Bokros is backed by one faction of the party while the other prefers Electrolux Hungary boss Janos Takacs, nominated by Prime Minister Ferenc Gyurcsany in the morning.

The liberal Free Democrats, whose support the minority Socialist government needs, said Bokros was the only candidate acceptable to them.

"We do not understand their decision, but of course we will consider the opinion of the SZDSZ (Free Democrats); it is unfortunate, but we will consider it," said Socialist MP Gergely Barandy.

The Socialists will reconvene on Saturday morning, and "will recommend the next steps to be taken" within a few days, Barandy said.

Speculation about who will become the next prime minister has been rampant in Hungary since Gyurcsany announced on Saturday that he would step down.

With the Socialists and Free Democrats having so far failed to agree on a candidate - at least one that is prepared to take on the job - the prospect of early elections is looming ever closer.

"Perhaps early elections would be better, because this is beginning to turn into a comedy," said Gabor Herendy of the conservative Hungarian Democratic Forum.

On leaving a closed meeting with Gyurcsany's Socialist Party on Friday afternoon, liberal leader Gabor Fodor said that only banker Gyorgy Suranyi, economist Laszlo Bekesi and former finance minister Lajos Bokros were acceptable to his party.

The governing Socialists are a few seats short of a majority and dependent on support from the 19-strong Free Democrat caucus for Gyurcsany's plan to appoint a new prime minister and avoid early elections.

The prime minister made the shock announcement that he was ready to stand down at a party conference on Saturday, acknowledging that his lack of support had made him an "obstacle" to essential reforms.

Suranyi, a former finance minister and regional head of Italian banking group Intesa SanPaolo, turned the job down on Thursday after failing to secure all-party support.

Bekesi also refused to accept his nomination, saying on Thursday that "no serious man" would take on the job of leading a Hungarian crisis government.

This leaves only Bokros, who was roundly rejected by the Socialist party immediately after Gyurcsany's announcement on Saturday.

As finance minister in the 1994-98 Socialist government, Bokros' draconian austerity package is credited with hauling Hungary out of a previous financial crisis.

He has already indicated that he would accept the job of prime minister if it is offered.

However, he is not popular with the rank and file of the Socialist Party, who are wary of his deep unpopularity with voters.

"Bokros is hard, cruel, and does not understand people; he is a neutron bomb. The infrastructure stays, the people perish," the Socialist backbencher Jozsef Karsai told Hungarian news website Index.

The centre-right opposition party Fidesz says early elections are the only democratic solution to Hungary's political and economic crisis, and flatly refuses to cooperate in setting up an interim crisis government.

"Hungary does not need crisis management, but total renewal," party leader Viktor Orban said on Friday.

Fidesz has held a commanding lead in opinion polls through over two years of economic crisis in Hungary and few Hungarians, regardless of political allegiance, doubt the party will win the next general election. (dpa)