Oliver Letwin is reported to have revealed last night that he is to stand down as Conservative shadow chancellor.

However, the popular figure is expected to take on a less demanding frontbench role and a campaigning job trying to broaden the party's appeal.

Meanwhile, Michael Howard is facing increasing pressure to lengthen his stay as Tory leader in order to capitalise on Labour's splits over Tony Blair's tenure as prime minister.

Following pleas from several party figures, Howard was last night discussing with aides whether to clarify his retirement plans.

Tory donors are said to have warned him that he was in danger of letting Labour off the hook at a moment of weakness for the government.

There is now increasing speculation that he will stay on to oversee the debate about the party's future as well the changes to its leadership rules.

Lord Heseltine, the former deputy prime minister, led the calls for Howard to stay on.

He said: "I think it is necessary for the party to have time to think clearly about who should be the new leader, time to see the candidates in action and time to assess what the public reaction is as opposed to the members' or activists' reaction. We have a mountain to climb. We have to win 150 plus seats."

The Tory leader held a press call yesterday as he welcomed the party's 54 new MPs to Westminster.

He told reporters: "I am absolutely convinced that this splendid new intake, brimming with talent, is going to set the scene for the next Conservative victory."

Tim Yeo and Nicholas Soames both confirmed yesterday that they are resigning from the shadow Cabinet.

Yeo, who stood down as shadow environment secretary, spoke of his "alarm" that support for the party was falling among vital sections of the electorate, such as the young and the professionally successful AB group.

"I think there has been too much focus on issues which are of concern to our traditional supporters," he told the BBC.

David Willetts, the shadow work and pensions secretary, has also called for the party to become more mainstream.

And writing in the Independent, former shadow Cabinet member John Bercow calls for "root and branch" reform to drag the party into the centre ground of British politics.