Prime Minister Margaret Thatcher said Wednesday she will battle to retain her leadership against her most serious political challenge since taking office in 1979.

"I fight on. I fight to win," Thatcher said as she left her office at 10 Downing St. for the House of Commons, where a second vote on the leadership of the ruling Conservative Party is scheduled for next week.Thatcher, who returned home early Wednesday from a 34-nation summit in Paris, met with Conservative leaders to assess her chances.

Thatcher suffered a resounding defeat Tuesday when she failed to stop a party leadership challenge by former defense minister Michael Heseltine in the first round of voting among Conservative lawmakers.

With Thatcher weakened politically and her long-governing party severely split, the opposition Labor Party - leading in opinion polls - is scenting victory.

"I think people are far more likely to switch from her to Michael Heseltine than the other way around," said Conservative lawmaker Timothy Raison, who abstained on the first round.

Party leaders, including chairman Kenneth Baker and chief whip Timothy Renton, met with Thatcher, BBC radio reported. Renton, the party's chief vote counter in Parliament, presumably gave Thatcher his view on her support.

Lord Whitelaw, a former deputy prime minister and a senior figure in the party, also visited 10 Downing St. It was not immediately known what they told her.

Thatcher, Europe's longest-serving prime minister, fell just short of the 15 percent margin she needed to avoid a second round of voting.

She received 204 votes to 152 for Heseltine in the secret ballot, with 16 lawmakers abstaining.

Conservative Party legislators, who hold 372 seats in the 650-seat House of Commons, will vote for a second time next Tuesday, and Thatcher would be expected to step down as prime minister if she does does not emerge victorious.

Rumors that Thatcher would resign pushed up the British pound on currency exchanges late Wednesday, dealers said.

The Times of London Wednesday reported strong speculation among legislators that senior Tories would try to persuade the strong-willed Thatcher to reverse her decision to fight a second round.

Heseltine could win the leadership by picking up the 16 votes that abstained on Tuesday and persuading 19 of Thatcher's supporters to change sides.

Other candidates have until noon Thursday to join the race.

In the second round, a simple majority can win, but other candidates now are free to join the race. If necessary, a third and final ballot would be held Nov. 29.