Watch an extended ITV News as the country awaits Tory leadership race results
Mr Sunak, a former chancellor, swiftly hit the threshold of 100 nominations from Conservative colleagues ahead of the deadline of 2pm on Monday, before commanding the public support of about half the parliamentary party.
Although Ms Mordaunt appears far behind and there is mounting pressure for her to pull out, her team are calling round Tory MPs in a bid to reach the 100 threshold, ITV News Political Editor Robert Peston understands.
If Ms Mordaunt, who's currently the Commons Leader, hits the target, she could face off against Mr Sunak in an online ballot of Tory party members.
But if she fails, or pulls out of the contest, Mr Sunak will take charge of the party without the need for a vote.
One of Penny Mordaunt’s leading supporters has urged her to drop out of the Tory leadership race and back Rishi Sunak.
Former minister George Freeman tweeted: “Penny Mordaunt is a huge force for Conservatism; with the life-story, vision and courage to help lead a Conservative revival. I’m proud to support her.
“But given the urgent need for Conservative stability and unity this week, I’m urging her to join and back Rishi Sunak today.”
In a statement on Sunday evening, former PM Boris Johnson said there was a “very good chance” he could have been back in No 10 by the end of the week if he had stood.
However his efforts to “reach out” to his rivals – Mr Sunak and Ms Mordaunt – to work together in the national interest had not been successful so he was dropping out.
While Mr Sunak has more than 140 MPs publicly backing him, Ms Mordaunt has fewer than 30.
Her team are now hoping that the departure of Mr Johnson will see a swathe of MPs who were backing him, or are yet to declare, swing behind her.
When might the new PM be announced? The key timings to look out for on Monday:
2pm - The party will announce which candidates have made it onto the ballot. If only one challenger is successful, they will automatically become PM.
2.30pm - If both candidates remain in the leadership race, they will make their case to MPs during a private hustings in Parliament.
6.30pm - 8.30pm - MPs will hold an “indicative” vote. The hope, perhaps, is that the loser of the “indicative” vote may drop out of the race.
9pm - If neither Mr Sunak or Ms Mordaunt drop out, the result of the MPs vote will be announced at 9pm.
Beyond Monday - An online vote will be held for Tory members if two candidates make it through the aforementioned parliamentary stages. It is hoped the entire process will be concluded by next Friday.
In a blow to Ms Mordaunt's campaign, three senior Tories who were backing Mr Johnson – Priti Patel, James Cleverly and Nadhim Zahawi – said they would now be supporting Mr Sunak.
Just hours before the Monday 2pm deadline, former home secretary Priti Patel tweeted: "In these difficult times for our country we must unite by putting public service first and work together.
"We care about our country and with the enormous challenges upon us we must put political differences aside to give @RishiSunak the best chance of succeeding."
Former environment secretary Michael Gove also announced he was backing Mr Sunak.
Ex-chancellor George Osborne went a step further and urged Ms Mordaunt to promptly drop out of the race.
"She can’t command the support of a majority of MPs. An uncontested election of Rishi Sunak today would reinforce the return of market credibility & show the Tories have rediscovered a will to win. She should then be part of his top team," he tweeted on Monday morning.
Despite the pressure on Ms Mordaunt to withdraw, ally Andrea Leadsom told ITV News there is "absolutely no chance that Penny will step down".
Ms Leadsom, a former Cabinet minister, claimed Ms Mordaunt has "a lot of support from colleagues".
Ex-Cabinet minister Andrea Leadsom explains why Ms Mordaunt's camp feel 'supremely confident'
The European Research Group (ERG), an influential backbench collective of Tory Eurosceptics, chose not to endorse either candidate.
After meeting with both Mr Sunak and Ms Mordaunt on Monday, the ERG announced that although it would not back a particular campaign, it would unite behind whoever becomes prime minister.
If Ms Mordaunt wins 100 nominations before 2pm, MPs will decide which of the two candidates they prefer in an “indicative” vote.
There will then be a final online poll of party members to decide the outcome with the result due on Friday – unless one of the candidates pulls out.
European Research Group chairman Mark Francois announces that the group won't back either candidate
Certainly, there are some in the party who would like to see an uncontested “coronation” to avoid a repeat of what happened with Liz Truss when the party in the country voted for a leader who did not have the backing of MPs.
Ms Mordaunt could find herself under pressure to withdraw if she finishes a long way behind Mr Sunak in the poll of MPs, even though she is popular with the Tory grassroots.
Many activists – many of whom loathe Mr Sunak for his role in bringing down Mr Johnson – will be furious if they are denied a say in the contest.
Nicola Sturgeon is among the opposition voices calling for a general election, arguing that the public should get a say in who is the next prime minister.
"I think people are just sick and tired of this Tory soap opera psychodrama," Scotland's First Minister said. "I mean it is appalling given the difficulties people right across the country are living through right now." Ms Sturgeon said many people will be breathing a "sigh of relief" after the "ridiculous notion" of Mr Johnson returning to No10 was "knocked on the head" following his withdrawal from the leadership race over the weekend.
'The second wave of austerity is going to be a horror show'
But she added that focus should be on the new prime minister's policies as opposed to their personality. "What is of profound concern to everybody, certainly to me right now, is that the Tories are about to unleash another wave of austerity on all of us. It is going to be a horror show." "Our public services cannot withstand - in my view - another round of Tory austerity," Ms Sturgeon told reporters, as she referenced the economic hardship caused by soaring inflation.
In a statement on Sunday evening, Mr Johnson said he had been “overwhelmed” by the support he had received from people urging to run just weeks after being forced out by his own MPs after one scandal too many.
If he had stood, he said there was a “very good chance” the members would have voted him back into No 10 by the end of week. He would have been “well-placed” to lead the party to victory in a 2024 general election, Mr Johnson added.
However he had come to the conclusion that “this would simply not be the right thing to do”.
Some MPs were sceptical of his claim to have secured the 100 nominations needed to go forward, with the numbers of public declarations of support falling far short of that.
There was speculation within Westminster that Mr Johnson chose to withdraw rather than face the humiliation of having to admit he could not get the numbers.
Labour leader Sir Keir Starmer told LBC: "When he first said that he was going to run, and everybody was sort of rallying around, I did put my head in my hands and think, 'so, really, we’re going to go from the prime minister who’s just crashed the economy … back to the guy that only … months ago, most of us were saying was unfit for office'.”
Sunak-supporting Tory MP Tobias Ellwood, meanwhile, dismissed calls from Labour for a general election.
“The country does not want further economic instability,” the chair of the Commons defence select committee told the BBC.
“There would probably be a run on the pound, that would see interest rates climb (and) mortgages go up as well. This isn’t the leadership the country wants.”
The pound continued to tick upwards on Monday morning, while government borrowing costs fell after Mr Johnson pulled out. The FTSE 100 started the day with a 0.5% rise, pushing it above the 7,000-point mark for the first time in a week.
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