KUALA LUMPUR -- Malaysia's ruling party will announce plans later on Tuesday for a gradual transition of power, with veteran Prime Minister Mahathir Mohamad agreeing to stay on until late 2003, a senior party official told Reuters.

The official, who asked not to be named, said a statement by Mahathir's United Malays National Organization (UMNO) expected at around 4.45 P.M. (0845 GMT) would confirm that the prime minister had gone back on his tearful announcement on Saturday that he was resigning his post.

The statement would confirm Deputy Prime Minister Abdullah Ahmad Badawi as chosen successor to Mahathir, who would withdraw to become an elder statesman with no formal role, the official said.

"Dr. Mahathir will remain prime minister until after the OIC (Organization of the Islamic Conference) meeting in September, whereupon he will go on leave for two months and Abdullah will be acting prime minister," the official told Reuters.

"Mahathir will resign when he comes back from leave and Abdullah will take over. This is the succession plan agreed by everybody," the official said.

The statement due to be released later on Tuesday would make no mention of when the government would call a general election.