Australia PM rules out retiring, to fight 2007 poll

CANBERRA, July 31 (Reuters) Australian Prime Minister John Howard ruled out retiring today, saying he will fight the next election due in late 2007 -- a move likely to fuel further leadership tensions with his deputy Peter Costello.

Mr Howard, in power for 10 years after four election victories, released a letter to his parliamentary colleagues, saying that the party wanted him to remain leader and Costello to remain Treasurer into the next election.

''My purpose in writing is to inform you, in advance of the public announcement, that I will commit to leading the party to the next election,'' Howard said in his letter.

''I spoke to Peter Costello yesterday to advise of my feelings.'' Opinion polls regularly show Howard has a strong personal approval rating with voters, making him the best placed to lead his Liberal Party to a fifth election victory against a resurgent centre-left Labor opposition.

A poll by Australia's Sky TV today found 82 per cent of Australians believed Howard had made the right decision to stay as the nation's prime minister, while 18 percent did not.

Until now Howard has steadfastly refused to commit to fighting the next election, sparking months of leadership speculation with Costello.

Howard has anointed Costello as his heir apparent when he finally decides to retire.

Costello's supporters had hoped Howard, who turned 67 last week, would stand aside by Christmas to give Costello time to adjust to the job ahead of the run-up to an election.

Costello has made no public comment on the latest development, although last week he told a radio interviewer he planned to stay on in public life for another decade.

Analysts said Costello had little option but to remain as Howard's treasurer and deputy, because he lacked the numbers to challenge Howard for the Liberal Party leadership.

''He either resigns in a huff, or stays on in a huff. He'll stay on in a huff,'' political analyst Nick Economou from Melbourne's Monash University told Reuters.

Costello needs to spend time re-building support among critics within the ruling Liberal Party, he said.

Reuters SB VP0910