Toronto ? Prime Minister Jean Chretien, the longest-serving leader of a Western democracy, announced Wednesday amid an internal party challenge that he will leave office in 2004 instead of seeking a fourth consecutive term.

A gruff politician known for his legislative savvy, Chretien took office in 1993 and oversaw Canada’s economic recovery while barely fending off a sovereignty referendum by Quebec.

With rival Paul Martin openly challenging his leadership of the Liberal Party, Chretien’s popularity dipped as many in and outside his party complained he was clinging to power for too long.

Speaking at a hastily arranged news conference at a Liberal Party caucus meeting in Saguenay, Quebec, Chretien said he decided two years ago not to run for a fourth term but had wanted to wait longer before announcing his intentions.

With his wife, Aline, at his side, Chretien said he needed 18 months to complete the legislative agenda of his government, then would step down.

“I will not run again,” he said. “I will fulfill my mandate and focus entirely on governing from now until February 2004. At which time my work will be done and at which time my successor will be chosen.”

Chretien, 68, acknowledged that Martin’s challenge to his party leadership, which has divided the Liberals and lowered his poll ratings, caused him to hasten the process.

Canadian media have focused on the Liberal dispute in recent months, and a series of polls show growing dissatisfaction, with people generally blaming Chretien for wanting to stay in office.

“This summer we have not been focused on governing. We are not doing our job. Canadians don’t like that. Liberals don’t like that,” Chretien said.

Chretien’s departure was unlikely to bring widespread change to the Liberals, with Martin the main contender to succeed him and Deputy Prime Minister John Manley considered another potential candidate.