TORONTO - It looks like Progressive Conservative Leader John Tory will finally have a shot at leading the Opposition party from inside the Ontario legislature as well as outside.

Laurie Scott will step aside after five years as a member of the legislature so Tory can run in her riding of Haliburton-Kawartha Lakes-Brock, near Peterborough, party sources confirmed Thursday.

However, the sources denied other media reports that Scott would be given the job as Tory's chief of staff in exchange for giving up her seat, which she first won in the 2003 provincial election.

Scott easily won re-election in 2007, capturing 50 per cent of the votes -- 20 per cent more than her closest rival. The Conservatives have held the large, heavily populated riding since 1990.

Tory's office wouldn't confirm or deny any of the reports, and said only that the leader would make an announcement Friday outside of Toronto.

By late Thursday, Tory's office had confirmed he would make the announcement in Lindsay, Ont., deep in the heart of the riding.

Scott's office also declined comment on the reports, some of which had her running again in the 2011 general election while Tory would search for yet another riding in which to run.

Reaction was mixed among voters in Lindsay, one of the main communities in the riding.

"He's being parachuted in, I understand that, but he is in a position of power, and that's not a bad thing for us," one unidentified woman told radio station CKLY-FM.

"Why should he take Laurie Scott's place when he can't even win in his own riding?" wondered another Lindsay woman.

Premier Dalton McGuinty has said he would move quickly to call a byelection to help Tory get a seat in the legislature, but the Liberals have not gone so far as to say they won't contest the riding.

"It's too early to say," said one Liberal insider. "We want to make sure Tory won't change his mind again and talk about funding private religious schools."

Most political observers agree Tory's controversial proposal to provide public funding for private religious schools cost the Conservatives any hope of winning the 2007 election and allowed McGuinty and the Liberals to cruise to a second consecutive majority government.

Tory has struggled to find a caucus member to step aside since he lost to Education Minister Kathleen Wynne in 2007. Tory was first elected in 2004 in a byelection in the Orangeville area, but vowed to run in Toronto in the 2007 general election, despite warnings he would lose the head-to-head battle with the popular Wynne.

As media speculation about who would resign for Tory switched from one caucus member to another during the past 15 months, the seat search dragged on longer than anyone expected, forcing Tory to miss a self-imposed Dec. 31 deadline to find a riding in which to run.

Caucus member Randy Hillier said Thursday it's crucial for Tory to finally get a seat in the legislature if the Conservatives hope to become a viable alternative to the Liberal government.

"I think everybody knows that John needs to have a seat and he needs to win a seat," Hillier said.

"There will be no strong, unified position until the leader has a seat."

Elected Conservatives have been reluctant to publicly criticize Tory since party veteran Bill Murdoch was booted out of the caucus in September for saying the leader should look for a new job.

Some outspoken critics within the party say Tory's inability to convince one of the caucus members to step aside before now shows he's a weak leader, and suggested convincing Scott to step aside may have come too late.

"Why now? Why couldn't they cut this deal ages ago?" asked one veteran party member who wanted to remain anonymous. "He's got to go."

It could cost taxpayers a half-million dollars or more for Tory to finally get a seat in the legislature.

Elections Ontario estimates byelections cost the province between $400,000 and $500,000, or just over $4 per voter.

Haliburton-Kawartha Lakes-Brock has 89,600 registered voters, 3,000 more than Scarborough-Rouge River, where a 2005 byelection cost taxpayers $516,000.