Labour's official candidate for next year's London mayoral election is poised to stand aside to make way for Ken Livingstone's return.

Nicky Gavron was in talks with the Labour Party chairman Ian McCartney on Thursday and is expected to announce her decision to stand aside within days.

Earlier this week the former deputy mayor met with Tony Blair to thrash out the terms of a deal.

It is thought that Gavron will become Livingstone's running mate and is set to be reappointed as deputy mayor.

The prime minister spent yesterday afternoon with Livingstone during a visit to a school in South London.

Earlier this week Blair gave a strong hint that Livingstone's exile from the Labour Party could be brought to an early end.

Speculation about the mayor's readmission grew at Westminster last night after Labour whips told MPs that Gavron was ready to quit.

Party strategists have been considering their options over recent weeks after opinion poll data revealed that she could be run into fourth place.

Speaking in the Commons the prime minister pointedly refused to name Gavron when challenged over who he would support for the mayoral race.

"I, of course, always support the Labour candidate," Blair told MPs on Wednesday.

But some Labour MPs, including several Cabinet ministers, are opposed to Livingstone's return to the party.

Education secretary Charles Clarke is said to be leading a Cabinet revolt over plans to readmit the mayor.

Gordon Brown is said to be against Livingstone's return, but will accept any decision made by the National Executive Committee (NEC).

Meanwhile members of the NEC are said to be angry at the behind the scenes manoeuvring.

Livingstone was expelled from the Labour Party after he ran as an independent candidate.

As party chairman Clarke voted against moves to readmit the mayor to the party.

But in recent weeks there have been signs of an early thaw in relations between the party's high command and the former Brent East MP.

Home secretary David Blunkett said Livingstone was "very different from the man I dealt with 30 years ago".

The mayor also signalled that he was willing to let bygones be bygones when he took to the hustings to campaign for Labour in the Brent East by-election.

The Tories have seized on the news that Gavron appears set to stand down.

Eric Ollerenshaw, leader of Conservatives on the London assembly, said: "The Labour Party are in chaos. It is all well and good Nicky Gavron standingdown but Livingstone is not yet a member of the Labour Party.

"No wonder Tony Blair wanted to keep Gordon Brown off of the NEC. Londoners like me must be wandering what the hell is going on or do we have to wait whilst the political spin doctors meet behind closed doors to carve up

"Labour's constitution and find a way to get Livingstone re-admitted to the party?"