Labour TDs expect party leader Joan Burton to announce her resignation from the position when a new government is formed.

Ms Burton previously indicated she intended to stay on, but a furious reaction within the party appears to have persuaded her to rethink. Sources in Labour said she realised she lacked the support from her colleagues to stay on.

“She told us she would put the interests of the party first and make her decision clear after a government was formed,” one TD said last night. The TD said it was the clear understanding of Labour colleagues that she would announce her resignation.

“Reality has bitten,” said another party source. “On the understanding that she is going, she is being allowed a grace period.”

Labour’s constitution requires a leadership contest if the party is not in government after a general election. However, TDs are waiting to see if Ms Burton will resign immediately, or if she will announce her departure at a future date.

Caretaker

If she resigns immediately after a taoiseach is elected, deputy leader Alan Kelly will replace her as a caretaker leader until an election for a new leader can take place.

Relations between Mr Kelly and Ms Burton have not been easy for some time, and she is known to harbour doubts about his suitability for the post of leader. However, many party insiders say Mr Kelly is likely to be the only strong candidate.

Minister for Public Expenditure Brendan Howlin has declined to put himself forward in recent weeks.

It has also been suggested in Labour that Minister for Education Jan O’Sullivan or junior minister Seán Sherlock might contest the leadership, but party sources played down the possibility last night.

“Kelly is the only one who really wants it,” said one senior party source.

His strong speech on water charges in the Dáil last week, when he attacked Fianna Fail and Fine Gael, impressed some in the party.

Indecision

Internal critics say the 10 weeks since the election have been a time of indecision and drift in the party.

After the scale of Labour’s losses became apparent, Ms Burton and senior Ministers said the party would go into opposition to rebuild.

However, after intensive lobbying by the Taoiseach and senior Fine Gael figures, the Labour leadership privately reconsidered and sought to build support for re-entering government. The party organisation, however, was opposed to the idea.

One encouraging development for Labour has been the outcome of the Seanad election, which saw some of the party’s most prominent ex- TDs – who had lost Dáil seats in February – win seats in the Upper House.

They include Aodhán Ó Ríordáin, Ged Nash and Kevin Humphreys.

Labour TDs also say they are likely to vote against the nomination of Enda Kenny as taoiseach when it comes before the Dáil.