Britain will vote for its next government on May 6, Prime Minister Gordon Brown will announce on Tuesday after meeting Queen Elizabeth to seek the dissolution of parliament, a Labour party source said on Monday.

Brown will meet cabinet ministers on Tuesday morning before asking for parliament to be dissolved on April 12 to give time to conclude essential parliamentary business before polling day, the source said.

Opinion polls suggest Brown's Labour party, in power since 1997, is on course to lose the parliamentary election to the Conservative opposition, but analysts say the vote could go either way or even result in a rare minority government.

"We remain the underdogs in this election," the Labour source said.

A hung parliament, where no party has overall control, is the worst case scenario for financial markets because political deadlock could hamper efforts to cut Britain's record budget deficit, currently around 12 percent of gross domestic product.

The economy has dominated pre-election skirmishes so far, with both sides arguing over the best way to reduce the deficit without jeopardising the recovery after an 18-month recession.

Labour has promised to halve the deficit over four years, but to put off spending cuts until 2011 when the economy should be better placed to cope without government support.

The Conservatives say delaying cuts will damage investor confidence and put Britain's triple-A credit rating at risk, driving up interest rates and hurting economic prospects.

Brown, who took over from Tony Blair in 2007, has struggled to sustain an early surge in popularity. A far-reaching parliamentary expenses scandal and devastating financial and economic crises have all taken their toll on his tenure.

The Conservatives were once red-hot favourites to win the election but admit the vote could now be very close. The party has faced criticism for offering change without giving enough details.

An inconclusive result may see the second biggest opposition party, the Liberal Democrats, cast as kingmaker in a coalition government -- a rarity in the British political system which tends to favour a two-party system and single party governments.

Reuters