OTTAWA - Debate over the Liberal party's future began raging even before Michael Ignatieff announced Tuesday he will resign as leader.

Battle lines were drawn between two prospective successors, Bob Rae and Dominic LeBlanc, over whether the once-mighty party should consider merging with the ascendant NDP.

Rae said the idea must be discussed. LeBlanc said it would be a disservice to the country and thousands of loyal Liberal militants to throw in the towel.

The two also squared off over the timing of the leadership vote to choose Ignatieff's successor, with Rae suggesting it should be as soon as possible and LeBlanc arguing there's no rush.

Ignatieff himself weighed in against the merger idea but acknowledged he won't be calling the shots after leading the Liberals to a bloodbath Monday, in which even he lost his seat.

"I will not be remaining as leader of this party," Ignatieff told red-eyed supporters during an emotional news conference in Toronto.

"I will work out with the party officials the best timing for a departure so we can arrange for a succession in due time."

He indicated he expects his successor will likely be chosen in the fall, suggesting he'll tender his formal resignation within a few weeks. Under the party's constitution a leadership vote must be held within six months of the leader declaring his intention to resign.

The self-described "natural governing party" was reduced Monday to a distant third with a mere 34 seats and less than 20 per cent of the popular vote -- the party's worst electoral showing since Confederation.

Liberal support collapsed in the face of a strong surge by Jack Layton's NDP. The NDP and Liberals split the centre-left vote in many ridings, particularly in Ontario, propelling Stephen Harper's Conservatives to a solid majority with about 40 per cent of the popular vote.

The vote splitting prompted Rae to bluntly conclude the Liberals must at least consider whether uniting with the NDP is the only way to defeat the Tories.

Rae, a former NDP premier of Ontario, said he's not promoting a merger; he's simply recognizing that the debate will inevitably take place.

"It's hard to see how the discussion could be avoided," said Rae, who acknowledged he's "thinking about" running to succeed Ignatieff.

"Whatever happens, the Liberal party needs to think long and hard about what it really believes in and what it really stands for and it also has to look long and hard at the political framework in which we're all working."

Rae said there's been "an evolution" among all parties and "it would be irresponsible not to listen to what Canadians think about this question."

Eddie Goldenberg, a longtime aide to former prime minister Jean Chretien, offered a similar assessment during a CBC radio interview.

Chretien, the last Liberal leader to win a majority, 11 years ago, has in the past mused about the possibility of merging with the NDP. But with his once-dominant party now severely weakened, some Liberals fear merger would effectively mean being taken over by the newly empowered NDP.

Rae said a merger "can never be about one party taking over another party. The discussion has to be about is there a possibility of a new, broader alliance. And if there is, fine. If there isn't, that's fine too."

Ignatieff turned thumbs down on the idea. He said he has "a great deal of respect" for Rae -- his former college roommate and one-time leadership rival -- but said he believes the Liberals and NDP hail from "different traditions."

And he predicted the Liberals will rise again.

"I think that Canada really needs a party of the centre and I will always believe that. I think the surest guarantee of the future of the Liberal party of Canada is four years of Conservative government and four years of NDP official Opposition."

That view was echoed by LeBlanc.

"The Liberal party is a resilient national institution. I think it has a bright future as a progressive, centrist option in Canadian politics," he told CBC-TV.

LeBlanc acknowledged the party has had difficulty in the last three elections articulating a "coherent and compelling vision. But he added: "I think it would be a mistake to say that somehow we need to fold up the tent. What we need to do is start renovating from the basement up."

Liberal activist and commentator Rob Silver said both New Democrats and Conservatives have long hungered for the demise of the Liberals, leaving a polarized, left-right, two-party system. But he said that's not what Liberals or Canadians want.

"I think Canadians are centrists and I think when we are at our best we're a centrist party," he said, adding that Liberals have no more interest in joining the NDP than they do in uniting with the Tories.

For all the debate among Liberals, Layton showed little interest in uniting his newly expanded fold with what's left of the Liberal party.

"We offered (Canadians) in this election an opportunity to break away from the old choices," he noted.

"A great many of them did and they've sent a lot of our members ... to Ottawa. Now our job is going to be to show that we can get that job done and that's our focus."

At his news conference, Ignatieff mused that his party's dismal showing had a lot to do with a relentless two-year barrage of Tory attack ads that portrayed him as a disloyal opportunist and part-time Canadian.

"Of course they attacked me, of course they vilified me, of course they engaged in an absolutely unscrupulous campaign of personal attack," he said.

He said people he met in person were often surprised "because I didn't turn out to be quite as bad as the ads portrayed me."

Ignatieff took responsibility for the debacle, saying: "The only thing Canadians like less than a loser is a sore loser, and I go out of politics with my head held high."

Still he said Canadians deserve better from their politics and their politicians, adding: "I leave politics with a strong desire that Canadians are better served in future."

Ignatieff, who left a prestigious position at Harvard to enter Canadian politics in 2006, said he intends to return to teaching "young Canadians."

He said he will consult with party officials about the timing of his departure and has asked deputy leader Ralph Goodale to convene the caucus next week to choose an interim leader.

Ignatieff said he's hopeful that some younger successor -- "I hope it's a young woman" -- will be able to restore the party's lustre.

"I hope there will be people coming after me who look at me today and say, 'He didn't make it, but I will."'