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Theresa May was on the brink of becoming of Britain’s prime minister on Monday after her rival Andrea Leadsom dramatically pulled out of the Conservative party leadership race.

Mrs Leadsom backed Mrs May to become leader in a statement to the press from Westminster just after midday.

“We need a new prime minister in place as soon as possible. Theresa May is ideally placed to implement Brexit on best possible terms for the UK,” Mrs Leadsom said.

The withdrawal meant only Mrs May was left in the race to become Conservative party leader after the field of candidates had been earlier reduced to two.

Graham Brady, chairman of the backbench 1922 committee which sets the rules on Tory leadership races, said Mrs May’s formal election could be confirmed “quite quickly”.

“There is no need to re-run the election. Our procedures are very clear, the rules are very clear and we will be in a position to move forward quite quickly,” he said.

Mrs Leadsom said she had been inspired to run for the leadership in the “best interests of the country” and felt the UK had a “bright future” outside the EU. But she added that she did not have sufficient support to lead a strong government.

“A nine-week leadership campaign is highly undesirable,” Mrs Leadsom said. “A strong and unified government must move quickly to set out what an independent UK framework for business looks like.”

Mrs May also won the public backing of Michael Gove, another former leadership rival.

“We should now move as quickly as possible to ensure Theresa May can take over as leader. She has my full support as our next prime minister,” said the justice secretary in a statement.

Boris Johnson, the former London mayor, said he had “no doubt Theresa [May] will make an excellent party leader and prime minister” and called for the handover of power to begin “immediately”.

Chris Grayling, the former justice secretary and head of Mrs May’s campaign, said she was “enormously honoured to be entrusted with this task by so many of her colleagues”.

The pound initially rallied on hopes of reduced uncertainty over the leadership of the UK. However, sterling later fell back to stand 0.2 per cent lower on the day.

The FTSE 250 stock index, the most UK-centric of the main London equities benchmarks, was 2.5 per cent up after the identity of the next PM became clear. The FTSE 100 was up 0.9 per cent to a day-high of 6,654.59, led by strong gains property-related stocks that have been hit hard since the vote for Brexit. Taylor Wimpey was the best single gainer, up 9.5 per cent.

Mrs Leadsom was said by friends to have spent the weekend in a state of emotional turmoil after she suggested in an interview that she would make a better prime minister than Mrs May because she was a mother.

The energy minister told the Daily Telegraph she felt “under attack” and had apologised to Mrs May. The home secretary said on Monday she had accepted the apology.

Mrs Leadsom, a former City minister who was one of the most prominent campaigners for Britain to leave the EU, insisted her views had been misrepresented by The Times. She later apologised, saying motherhood should not play any part in the election campaign and she deeply regretted “that anyone has got the impression that I think otherwise”.

Her withdrawal is the final indignity for the four most prominent faces of the Leave campaign, who succeeded in leading Britain out of the EU but then saw their own ambitions dashed.

Mr Johnson had appeared set to be prime minister but was betrayed by Mr Gove, whose own leadership chances were thwarted when he finished a poor third in the ballot of Tory MPs.

The former London mayor, who had offered his support to Mrs Leadsom, had been low-key in his backing in recent days.

Nigel Farage resigned as Ukip leader immediately after the Brexit referendum result and Mrs Leadsom’s departure means the pro-Remain Mrs May is left to pick up the pieces.

Mrs May formally launched her campaign to become prime minister in Birmingham on Monday with a promise to preside over a more responsible form of capitalism, tackle boardroom excess and predatory corporate takeovers.

Though a low-key supporter of Remain in the referendum, Mrs May said she would take Britain out of the EU: “Brexit means Brexit,” she said. “We’re going to make a success out of it.”

She made a series of criticisms of George Osborne’s tenure at the Treasury, saying he had neglected productivity problems and suggesting that government-backed project bonds could be used to boost infrastructure.

Mrs May also called for a “proper industrial strategy” and a plan to develop all of Britain’s great cities, implying Mr Osborne had concentrated on boosting “one or even two of our great regional cities” — a reference to his focus on Manchester.

There was a familiar call for the government to take more powers to block predatory takeovers of key companies — citing Pfizer’s failed bid for AstraZeneca — and another promise to tackle corporate tax evasion.

Her speech made it clear that she saw high executive pay, irresponsible corporate behaviour and a widening gap between London and the rest of the country as significant factors in the Leave vote.

“If you’re from an ordinary, working-class family, life is just much harder than many people in politics realise,” she said in a speech reminiscent of some former Labour leader Ed Miliband’s rhetoric before the 2015 election.

Mrs May believes the Tories are better placed than Labour to reform capitalism and her pitch for Number 10 is reminiscent of the blue-collar Tory values espoused by John Major.

Within hours of the announcement by Mrs Leadsom, the Tories were facing calls from both Labour and the Liberal Democrats for a snap general election for Ms May to seek a democratic endorsement.

Jon Trickett, a key ally of Jeremy Corbyn, Labour leader, said there would be a “coronoation” of an unelected prime minister.

“It is crucial, given the instability caused by the Brexit vote, that the country has a democratically elected prime minister,” he said. “I am now putting the whole of the party on a general election footing.”

Tim Farron, leader of the Liberal Democrats, said it was “inconceivable” that Mrs May should be crowned without winning an election in her own party – “let alone the country”.

“There must be an election. The Conservatives must not be allowed to ignore the electorate, their mandate is shattered and lies in ruins,” he said. “Britain deserves better than this Tory stitch up. May has not set out an agenda, and has no right to govern. She has not won an election and the public must have their say.”