In a sudden and dramatic last-minute twist, Nitin Gadkari, facing allegations of dubious funding of his company, was tonight forced out of the race for BJP President's post and Rajnath Singh emerged the consensus choice for the office.

In a late-night development, Gadkari issued a statement opting out of the election scheduled tomorrow, saying he did not want that allegations against him should in any way adversely affect the interests of BJP.

"I have, therefore, decided not to seek a second term as the President of BJP," said Gadkari, who is expected to propose Rajnath Singh's name tomorrow.

62-year-old Rajnath, who had preceded Gadkari as BJP president till 2009, emerged the new choice at a hurriedly-called meeting of top leaders including Sushma Swaraj, Arun Jaitley, M Venkaiah Naidu and RSS representative Ram Lal tonight.

L K Advani, who was dead set against a second term for Gadkari, was away in a place near Mumbai and attended a function with Gadkari but the two did not even exchange a word, reflecting the chill between them.

Rajnath Singh is also considered close to RSS and that appeared to have tilted the balance in his favour.

Gadkari, whose candidature was being strongly pushed by RSS despite reservations within the party, was all set for re-election before senior leader Yashwant Sinha decided this evening to throw his hat in tomorrow's polls.

The move by Sinha, who had earlier demanded Gadkari's resignation in the wake of allegations of impropriety by his firm Purti Group, forced change on the candidate.

Gadkari said the allegations against him were aimed at "maligning" the image of his party.

"I will continue to serve the party as a committed worker. I don't want allegations against me to affect the party adversely," he told reporters at Mumbai airport before leaving for Delhi.

"There are allegations against me and I want to come clean. I will tackle these charges both politically and legally. The decision to opt out (of BJP President's race) is entirely my own," Gadkari maintained.

"I am ready to face any inquiry. I have informed my party that I won't take any post till I am proved innocent. "I will extend my full cooperation to whosoever becomes the next BJP President."

Maharashtra BJP President Sudhir Mungantiwar, who accompanied his outgoing chief, said Gadkari was quitting because the allegations were aimed at "defaming" the party.

He described reports about senior BJP leader L K Advani's opposition to Gadkari's candidature as "rumours".

Meanwhile, MNS chief Raj Thackeray, who enjoys cordial relations with Gadkari, described him as an "honest person".

"Gadkari is an honest person. But the fact is that Delhi leaders are allergic to Marathi people," he said.