A close aide said the Sonia Gandhi had opted out of India's top job because she feared a backlash from Hindu hard-liners who have waged a bitter campaign against her because she has foreign roots.
"They can go to any extent," the aide, who would not be identified, quoted her as telling members of the United Progressive Alliance (UPA) coalition that she stitched together after the Congress's surprise election victory last week.
The two names in the hat to replace Gandhi are Manmohan Singh, a committed economic reformer, and another former finance minister, Pranab Mukherjee, according to UPA leaders.
Addressing 145 newly elected Congress MPs in parliament on Tuesday, Italian-born Gandhi cited personal reasons for her dramatic decision.
"I would follow my inner voice. Today it tells me that I must humbly decline this post," said a grim-faced Gandhi.
"My aim has always been to protect the secular foundations of our nation," she said. "We have waged a successful battle but we have not won the war ... I request you to accept my decision and I will not revert. There is no question. It is my inner voice, it is my conscience."
Congress members made more than three hours of speeches, some tearful, urging her to reconsider.
"I have listened to your views, your pain and anguish on the decision I have taken. I am aware that I am causing anguish to you but I think if you trust me, allow me to take my decision," she said afterwards, clearly strained.
TEARS, PASSION, CRACKED VOICES: In a string of speeches marked by impassioned pleas, tears and breaking voices, Congress MPs said millions of ordinary Indians had chosen her to lead them and begged her to ignore attacks by Hindu nationalists over her foreign birth.
"Please remain with us, you cannot betray the people of India," said one emotional MP, Mani Shankar Aiyer, in the same hall where Gandhi was anointed prime minister-elect three days ago. "The inner voice of the people of India is that you should be the prime minister."
Aiyar came close to tears, saying voters had identified the party with her.
"We have been saying that a vote for us is a vote for Sonia Gandhi, Aiyar said.
Kapil Sibal, an incoming Congress MP, said to Gandhi: "We have faith in you and no one else."
Gandhi, in a blue-lined cream sari, sat silently throughout, tears welling in her eyes. She rejected a unanimous party room motion to reconsider.
And the meeting broke up without choosing a replacement, leaving unanswered the question of who will ask President Abdul Kalam to let Congress and its allies take office, and when.
Supporters had gathered in their thousands earlier in the day outside Gandhi's house in Delhi, waving pictures of her and chanting slogans demanding she take up the prime minister-ship.
A former provincial Congress legislator, Gangacharan Rajput, held a revolver to his head, threatening to commit suicide unless Gandhi changed her mind.
Scattered protests were reported across the country. One Congress worker in the northern city of Kanpur doused himself with kerosene and tried to burn himself alive, but was stopped. Another tried to jump from a building.
Congress MPs on Saturday named Gandhi as their candidate for the prime minister-ship after their shock electoral defeat of the Hindu nationalists.
By Monday she had secured the unanimous support of the 19 other UPA leaders, and on Tuesday met President Abdul Kalam to discuss forming a government. Congress leaders had said she would be sworn in on Wednesday.
"For her, the decision was tough," Gandhi's daughter Priyanka Gandhi Vadra told reporters in parliament. "It was very emotional for us and not an easy decision to take.
"She never wanted to enter politics and when she did, her goal was never to secure the post of prime minister," she said, adding that Gandhi would mull the pleas for her to reconsider.
"We will talk to her at home and then let us see," Vadra said.
Gandhi's son Rahul, who was elected to parliament for the first time in the April-May poll, said his mother had answered critics from the Hindu nationalist Bharatiya Janata Party (BJP) who repeatedly raked up her Italian origin as an election issue, vowing to never accept a foreign-born leader.
"People have said all sorts of things about her. People may not be able to believe there is a person who can walk away from the post of prime minister. But there is," he said.
BJP president Venkaiah Naidu said on Monday outgoing premier Atal Behari Vajpayee would be the only party member to attend an oath-taking by Gandhi.
"Had it been any other leader, we would have had no problem," Naidu said.
Senior Congress leader Salman Khurshid told reporters earlier that Gandhi, the widow of slain premier Rajiv Gandhi, was "absolutely anguished" by the Hindu nationalists campaign against her.
"She has vindicated the honour of her husband," Khurshid said. "Now she feels the country comes first." Rajiv Gandhi was assassinated on May 21, 1991 by a Tamil suicide bomber in apparent retaliation for his government's intervention in Sri Lanka.
Somnath Chatterjee, a communist leader, said Gandhi's children were against their mother becoming prime minister because of fears for her safety.