MEP Miriam Dalli announced on Thursday that she had no intention to contest the Labour Party leadership election to succeed Joseph Muscat.
In a Facebook post, Dr Dalli said: "After due consideration, I have decided not to contest for the leadership role of the Labour Party. I would like to thank all those who have shown their support and encouraged me to go for this role. I will continue working hard in the European Parliament to reciprocate the trust that the Maltese citizens have placed in me."
Her decision is expected to propel Health Minister Chris Fearne as the favourite to become Prime Minister when Dr Muscat steps down in January.
The other potential candidates being named are Minister Ian Borg and MP Robert Abela.
PL sources said Mr Fearne has managed to rally support within the Labour parliamentary group, and increasingly among members, especially since he is not perceived as being one of the "Muscat clan".
Some officials told Times of Malta there is also mounting pressure within the party corridors for Mr Fearne to be uncontested in the January 8 election to avoid a divisive leadership contest in a tense and delicate moment for the party.
Lawyer and former journalist Miriam Dalli, 43, was a darling among Labour supporters, winning a staggering 63,438 votes in last May's European elections, establishing a new record for Labour candidates.
However, she was perceived among many as being close to Joseph Muscat, once seen as a golden ticket but increasingly seen as a liability in the wake of the Daphne Caruana Galizia murder investigation.
In a Facebook post, Mr Fearne said he was sure Dr Dalli and himself would continue to work together to build on the success that had already been achieved. She had a lot to contribute to the Labour Party, now and in the future, and they could look to the future together.