New Brunswick MP Dominic LeBlanc is expected to announce Monday that he will drop out of the Liberal leadership race to replace Stéphane Dion, leaving only two contenders, CBC News has learned.

LeBlanc is expected to throw his support behind front-runner Michael Ignatieff, the CBC's Susan Bonner reported, citing sources.

But a source close to LeBlanc told the Canadian Press no decision has been made "at this time."

LeBlanc, former Harvard professor Ignatieff and former Ontario premier Bob Rae are in a race to replace Dion, who announced he would be stepping down as leader after the party's poor showing in the Oct. 14 election.

In one of the worst results in terms of popular vote for the party in more than 100 years, the Liberals took 77 seats. Going into the election, the party had held 95.

The leadership convention is scheduled be held in Vancouver from April 30 to May 3. But Ignatieff and Rae have been saying recently that the Liberal party needs to find a new, permanent leader before Parliament resumes on Jan. 26. Liberals close to Dion expect him to resign at a Liberal caucus meeting scheduled for Wednesday.

The Liberal party has come up with a proposal to speed up its leadership contest and find a replacement next month in time for a crucial budget vote. That vote could plunge the country into an election or see the Harper Conservatives replaced by a coalition government.

The proposal, which the Liberal party executive was poised to consider by conference call late Sunday, would give every party member a vote by a combination of phone and online ballots. The idea was being vigorously promoted by Rae.

However, Ignatieff's camp was arguing that the proposal would violate the party's constitution and that the May 2 vote to choose Dion's successor should go ahead as planned.

If Dion does resign Wednesday, Steven MacKinnon, Ignatieff's national campaign director, said the party constitution provides only one method for choosing an interim leader — a decision by the national executive, in consultation with the Liberal parliamentary caucus.

LeBlanc's decision could hinge on the precise procedure adopted to replace Dion. LeBlanc has little support within the parliamentary caucus and, like Rae, favours a wider ballot to fill the post should Dion leave early.

Insiders in rival camps said Ignatieff and his supporters were lobbying hard to have Ignatieff chosen as interim leader by a vote of Liberal MPs and senators at the Wednesday caucus meeting, with the decision to be ratified formally at the May convention.

MacKinnon denied that but other sources said Ignatieff was personally calling MPs to urge that caucus settle the matter.

A caucus vote would give Ignatieff a decided edge. Indeed, rival camps said some Ignatieff supporters were arguing that the matter should be settled strictly by the 77 elected Liberal MPs, which would likely guarantee an Ignatieff victory.

Ignatieff is believed to have the support of at least 50 MPs although rivals insist the number is closer to 30 and about 10 of 58 Liberal senators. Rae is believed to have stronger support among senators.

With files from the Canadian Press