Former Defense Secretary Michael Heseltine said Wednesday he will challenge Margaret Thatcher as leader of the Conservative Party, and thus prime minister.

Heseltine, who resigned as Mrs. Thatcher's defense minister in 1986, will run in a ballot among Conservative legislators next week.The challenge to Thatcher after 11 years in power comes amid growing criticism within the governing party over the prime minister's reluctance to integrate with the European Community.

The party also is suffering in the polls as a result of high interest rates, double-digit inflation and an unpopular local per-capita tax dubbed the "poll tax."

"I am persuaded that I have a better prospect now than Mrs. Thatcher of leading the Conservative Party into a fourth election victory," said Heseltine, 57.

He said he decided to run because of deep divisions within the party over steps toward European unity and the Conservatives' recent third-place finish in a parliamentary special election. He promised to review a new local head tax, which Thatcher pushed through Parliament.

There was no immediate statement from Thatcher, but aides told reporters at her 10 Downing St. office that she was determined to defeat Heseltine.

Kenneth Baker, the chairman of the Conservative Party, said Heseltine's candidacy was "unnecessary and unwanted."

Heseltine's chances were not immediately clear. He needs 159 votes on Tuesday among the 372 Conservative legislators in the 650-member House of Commons to force a runoff with Thatcher.

"More than 100 of my parliamentary colleagues have urged me to stand and promised me their support," Heseltine said.

Mrs. Thatcher, who will be in Paris attending a 35-nation summit of leaders from East and West, will vote by proxy in the ballot, party officials said.

Heseltine stepped forward a day after Sir Geoffrey Howe, who resigned as deputy prime minister on Nov. 1, delivered a scathing attack in the House of Commons on the leader he had served throughout her years in power.

Howe resigned in protest of Mrs. Thatcher's rejection of a plan adopted by the 11 other European Community leaders at a summit in Rome to set up a single central bank by 1994 and a single currency, perhaps by the year 2000.

Thatcher supporters on Tuesday came to her defense.

"To attempt to throw over Margaret Thatcher now would be an act of panic and madness, and a denial of all she has achieved over the past 11 years," parliamentarian Sir John Stokes said Tuesday in defense of the Tory leader.

Lawmaker George Younger said the deployment of British troops in the Middle East made it the wrong time for a challenge against "a critical world leader."

Thatcher has faced no serious challenge since she ousted former prime minister Edward Heath as party leader in 1975.

The woman who faced down rebellious labor unions, slashed government spending and was known in the Soviet press as the "Iron Lady" served notice she would not go without a fight.

The opposition Labor Party, no longer the divided doctrinaire socialist party that Thatcher easily defeated in 1979, has been ahead in opinion polls for 16 months.