Turkish Foreign Minister Abdullah Gul has been picked as the ruling party's presidential candidate, a senior party source said on Tuesday, a move seen as a compromise but which may cause further tensions with the army.
Prime Minister Tayyip Erdogan had come under intense pressure from the secular establishment, which includes army generals and judges, not to run for president himself because of his Islamist past.
Secularists had hoped Erdogan would pick a consensus candidate to run in the election. Parliament, where his ruling AK Party has a big majority, elects the president.
Gul is a respected diplomat, who has overseen the launch of European Union accession talks as foreign minister. But his wife wears the Islamic headscarf, a potential source of tension with Turkey's secularists.
Turkish broadcasters CNN Turk and NTV also reported Gul as the party's candidate.
Senior members of the AK Party, which has roots in political Islam, have voiced concern the party would lose votes in a November general election if Erdogan, Turkey's most charismatic politician, became president and quit party politics.
Erdogan, 53, has never said he would run but had strongly hinted at the possibility.
Turkish financial markets have rallied in recent days, boosted by expectations that Erdogan will not run for president, thus easing the standoff between secularists and the AK Party.
Leading Turkish newspaper Hurriyet, quoting unnamed sources close to the prime minister, said Erdogan was expected not to run for the seven-year post and would most likely make his announcement on Tuesday.
April 25 is the deadline for registration of candidates. Parliament will begin the first round of votes on April 27. The key vote will be held on May 9.
Elections for parliament are due in November. The constitution says the president must remain impartial and cannot get involved in national politics, which would bar Erdogan from campaigning.
Not running for president would also boost the party's chances of gaining an absolute majority in parliamentary elections. Some AK Party members say polls may be brought forward from November.
Under Erdogan, Turkey has achieved strong economic growth and secured the 2005 launch of European Union entry talks.
Analysts say Erdogan, a charismatic man from a humble social background, would be more effective as prime minister in pushing an ambitious reform programme aimed at meeting EU entry terms.
Pressure has mounted on the government in recent weeks.
Earlier this month, more than 350,000 people rallied in Ankara against a possible Erdogan presidency.
Erdogan is accused of undermining secularism by, for example, trying to ease restrictions on the Muslim headscarf and promoting religiously minded supporters in the bureaucracy.
The armed forces chief General Yasar Buyukanit and outgoing president Ahmet Necdet Sezer have warned of threats posed to the republic in comments seen as warnings to Erdogan.
In Turkey, the government holds most power but the president can veto laws, veto appointments of officials, appoint judges and is commander in chief of the military.
As successor to modern Turkey's revered founder, Mustafa Kemal Ataturk, the president also carries great moral weight.
