All factions in the People Power Party now say they will support Somchai Wongsawat, brother-in-law of former Prime Minister Thaksin Shinawatra.

A rebel faction within the party had threatened not to support the nomination, saying it would only prolong the country's political crisis.

Mr Somchai must be approved by parliament in a vote on Wednesday.

But the party says it is confident it will win sufficient votes.

The agreement capped a day of intense political bargaining, with the threat of the party having to call a snap election if the deal-making failed.

The BBC's Jonathan Head in Bangkok says major factions within the PPP have been demanding cabinet posts in a future government in return for their support of Mr Somchai.

At the same time, prosecutors issued a second arrest warrant against Mr Thaksin, now in exile in the UK.

Reconciliation

Party spokesman Kuthep Saikrajang said on Tuesday that a faction of 73 lawmakers dropped their objection to backing Mr Somchai, who became acting prime minister last week after a court forced Samak Sundaravej to step down.

One of the dissidents, Suthin Klangsang, said at a news conference that the breakaway group accepted the party's choice "after a discussion of the party and after listening to Mr Somchai".

Correspondents say that the apparent conclusion of haggling for cabinet positions makes the election of Mr Somchai at Wednesday's special session of parliament highly likely.

"Tomorrow, all 73 MPs in our group will vote for Mr Somchai as the new prime minister," Supachai Poesu, a spokesman for the faction, told reporters after a party meeting.

Mr Somchai is married to a sister of Mr Thaksin and so provided a target for renewed opposition from inside and outside the government.

Protesters occupying the main Government House in Bangkok are demanding a change of government, arguing the present one is merely a proxy for Mr Thaksin.

Arrest warrant

The Supreme Court issued a second arrest warrant for Mr Thaksin on Tuesday after he failed to appear at the start of a trial investigating soft government loans to the military regime in neighbouring Burma while he was in office.

Another warrant was issued against him and his wife, Pojaman, when they failed to return from Beijing last month for a separate corruption trial.

Mr Thaksin faces charges of conflict of interest and abuse of power for approving a 2004 low-interest loan to Burma in exchange for satellite services and equipment orders from the Shin Satellite company, then owned by his family.

The four billion baht (currently the equivalent of US$127m) loan was issued by the state-controlled Export-Import Bank of Thailand.

The case has been suspended until Mr Thaksin can be presented in court.

BBC