Sir Malcolm Rifkind dropped out of the Tory leadership contest yesterday to back Kenneth Clarke.

The former Foreign Secretary hailed his old Cabinet colleague as a potential Prime Minister who was "head and shoulders" above rivals.

His endorsement, despite differences over Europe, is a boost for the ex-Chancellor who is in danger of being eclipsed by fellow moderate David Cameron, the new front-runner.

A Populist survey found Mr Cameron surging 30 per cent ahead among Tory supporters mainly at the former Chancellor's expense.

* What do you think? Who do you believe is the best Tory leadership candidate? We want know - get in touch by email, messageboard or feedback form*

Liam Fox now has fewest public backers, making him favourite for elimination in the first knock-out ballot of MPs.

But that could change after the first hustings today when candidates address right wing factions Cornerstone, the 92 and No Turning Back groups.

Dr Fox is effectively battling former front-runner David Davis for the support of the party's right.

With nominations closing tomorrow, Cornerstone insist they reserve the right to field their own candidate.

However, he or she would be unlikely to survive next Tuesday's first Parliamentary Party ballot.

Although first to declare his candidacy, Sir Malcolm, 59, trailed the contest with the public support of just six fellow MPs.

Thought to have returned to the Commons after an eight-year absence intent on leading the party, he was reluctant to drop out.

But the shadow Work and Pensions Secretary yesterday concluded he had no realistic chance of reaching the final two in the membership ballot.

There had been rumours he would back Mr Cameron following the young shadow Education Secretary's barnstorming conference speech in Blackpool last week.

However, announcing he would stand aside, Sir Malcolm said: "I believe that Ken is head and shoulders above all the others.

"He is a potential Prime Minister. If we try to choose a leader of the opposition, that is what we will end up with, someone like Neil Kinnock in 1992 who will not be able to get the public support that is required."

Sir Malcolm, a veteran of the Thatcher and Major governments, insisted he had significantly more support than his public declarations.

Key Cameron lieutenant Ed Vaizey played down the significance of the endorsement and insisted they were not fighting for the same ground as the former chancellor.

"I don't think we expected Malcolm Rifkind to plump for David Cameron. He has known Kenneth Clarke for a long time and sat in Government with him," he said.

"The idea that you can bracket him, as it were, in exactly the same camp as Ken Clarke is ludicrous." But Mr Clarke's camp were delighted by the endorsement as they try to regain the initiative in the wake of Mr Cameron's post- conference momentum.

"Ken is delighted to receive the support of such a formidable political figure who believes that we can tune this party in to a serious party of opposition and beat Blair and Brown at the next election," a spokesman said.

Bookmakers William Hill cut their price on a Clarke victory from 7/1 to 6/1 in the wake of the news.

Mr Cameron is favourite as 4/6 followed by Mr Davis at 2/1 while Dr Fox is on 10/1.