Former Chancellor of the Exchequer Rishi Sunak and Foreign Secretary Liz Truss are to face off in a vote by the members of the UK Conservative Party to elect a party leader to replace Prime Minister Boris Johnson.
Penny Mordaunt was eliminated in the last round of voting by Conservative MPs on Wednesday.
Rishi Sunak got 137 votes while Liz Truss overtook Mordaunt with 113.
Mordaunt, a junior trade minister, got 105.
The results of the party members' vote will be announced on September 5.
Sunak was one of the Conservative MPs who resigned from the Cabinet and precipitated Johnson's resignation. Truss, who voted Remain in the Brexit referendum, stayed loyal to Johnson - the architect of Brexit - till the end.
Mordaunt -- the one-time bookmakers' favourite -- lapsed to outsider status after Truss's fellow right-winger Kemi Badenoch was eliminated on Tuesday.
In a bid to woo those MPs, Truss wrote in Wednesday's Daily Telegraph that her plan to revive the economy would be "based around tax cuts, deregulation and tough reform".
Former minister David Davis, a backer of Mordaunt, accused Sunak of lending votes to Truss so he could face her in the runoff.
"He wants to fight Liz, because she's the person who will lose the debate with him," he told LBC radio.
Poll: Sunak has least appeal among party members
A YouGov poll published before the vote indicated that, despite his popularity with colleagues, Sunak was the least appealing candidate to the members.
The BBC plans to host a live televised debate with the final two candidates on Monday. Sunak won the two previous debates, according to snap polls, and the second one featured a no-holds-barred clash with Truss.
But Sunak's popularity with the Tory grassroots has faded since questions were raised over his family's tax arrangements, and as he presided over sky-rocketing inflation, which hit a new 40-year high of 9.4 percent in June.
In a new policy announcement, Sunak vowed an "ambitious new plan to make the UK energy independent" by 2045 in order to prevent future energy-driven inflation spikes, after Russia's war in Ukraine sent gas prices rocketing.
Mordaunt had headed the same YouGov poll of Tory members previously.
But she slipped after a damaging few days in which her former boss, one-time UK Brexit pointman David Frost, slammed her work ethic and questions were raised over her stance on transgender rights.
Johnson announced on July 7 he was quitting as Conservative leader after a government rebellion in protest at his scandal-hit administration.
Under Britain's parliamentary system, the leader of the biggest party is prime minister and can be changed mid-term without having to call a general election.
Labour leader Keir Starmer accused the Tory candidates of "fantasy economics" before turning his fire on the outgoing Johnson.
"He is a complete bullshitter and I think he's been found out," he told Labour prime minister Tony Blair's former spin chief Alastair Campbell in a podcast.
Starmer attacked Johnson for the Downing Street "Partygate" scandal, which saw him fined for breaking the Covid lockdown rules he set for the public.
"It wasn't just that he did things which broke the rules, it's that he then took the piss out of the public with his ridiculous defences afterwards," the Labour leader added.
It is "good for the country" that Johnson is going, Starmer added, saying it was reflected in public opinion at the last local elections at which the Tories lost hundreds of council seats.