Welsh Labour will discuss coalition

He was speaking after voters returned a hung Assembly when they went to the polls to deliver a bruising verdict on him on Thursday. Labour fell from 29 to 26 seats in the 60-member Assembly, leaving it short of the majority it sought.

Mr Morgan was meeting members of the Welsh Labour hierarchy to discuss the way forward. But he said Labour AMs will have the final say about who to co-operate with in Cardiff Bay during the final two years of his career. He will stand down in 2009 having faced the electorate for the last time.

He said: "The discussion will be a free and open discussion within the group on what's the best way forward. I can't have the group finding out from the media, however much I love the media, what I think the best strategy is."

He added: "It's not a question of taking your bats home because you have not got a majority. You have got to deliver for the people of Wales. We have confounded the doom-mongers. They were predicting the implosion or collapse of the Labour vote - that has not happened."

In an ITV Wales interview, he said: "One of the things which doesn't look possible is Labour soldiering on alone - 26 seats isn't enough for that." He was cheered by party activists at a breakfast meeting in Cardiff, but Mr Morgan faces a difficult balancing act and a weekend of phone calls.

Mr Morgan cited apathy as a factor in Labour's poor showing, particularly on traditionally Labour-supporting housing estates and in inner-city areas.

Although it remains by far the largest party, Labour lost key seats to the Tories and Plaid Cymru. It defied the swing to gain just one seat - Wrexham - and got two top-up members in the Mid and West Wales region when its first-past-the-post seats there were lost.

After the final declaration Plaid came second with 15 seats, the Tories third on 12 and the Liberal Democrats still fourth having made no gains on six seats.

Mr Morgan could revive the Lib-Lab administration that lasted from 2000 to 2003, although Plaid has offered to join forces with Labour. The alternative is a so-called rainbow alliance of the Tories, Lib Dems and Plaid.