Media playback is unsupported on your device Media caption Angela Eagle: "I'm announcing tonight I am withdrawing from this race and supporting Owen"

Angela Eagle has pulled out of Labour's leadership race and backed ex-shadow work and pensions secretary Owen Smith in his challenge to Jeremy Corbyn.

The ex-shadow business secretary said she was dropping out "in the interests of the party" and would back Mr Smith "with all her might and enthusiasm".

It came as Mr Smith won the backing of more MPs in a party ballot and said it was "time to move on" from Mr Corbyn.

Labour's leader says he will win despite losing the support of most MPs.

Mr Smith will now go up against Mr Corbyn in a head-to-head contest over the next two months, in which party members who joined Labour before 12 January, members of trade unions affiliated to Labour and registered supporters who sign up by paying £25 before Wednesday's 17:00 BST deadline will be able to take part.

Mr Smith's emergence as the sole challenger to Mr Corbyn comes after weeks of turmoil within the party following the UK's vote to leave the EU, which triggered a mass walkout from the shadow cabinet and an emphatic vote of no confidence in Mr Corbyn by his MPs.

Media playback is unsupported on your device Media caption Owen Smith calls Angela Eagle a "star" after she leaves the Labour leadership contest

Both Ms Eagle and Mr Smith said whichever of the two them had the least support in the parliamentary party would withdraw from the race to challenge Mr Corbyn for the leadership, to which he was overwhelmingly elected only last September.

Although nominations officially close on Wednesday, Mr Smith had built up a lead over his rival, winning the backing of 90 MPs and MEPs including former leader Ed Miliband.

Analysis by the BBC's political editor Laura Kuenssberg

In the last two weeks Owen Smith has gone from someone who one MP described as "just playing games" to being the official challenger to Jeremy Corbyn.

Can he pull off a far bigger ask of actually beating him, and demolishing Mr Corbyn's mountain of membership support?

On his side is, finally perhaps, unity among the vast majority of Labour MPs and MEPs.

Angela Eagle dropped out with dignity so that there would be only one candidate. Owen Smith was warm in his tribute to her tonight and dropped heavy hints about campaigning side by side with her in the next two months to smooth the way for senior MPs to work together.

It's understood he has promised her the position of shadow chancellor if he wins the post. And despite some disquiet inside the party about not fielding a female candidate, in most quarters there is relief and a new focus now there is only one candidate and the race is under way.

Read more from Laura

Although Ms Eagle's figures have not been released, the BBC's political editor Laura Kuenssberg said she understood she had got 25 fewer.

Offering her congratulations to Mr Smith, Ms Eagle said the Labour Party under Mr Corbyn's leadership "was not working" and that he did not have the confidence of his MPs to lead an effective opposition able to "take the fight" to the Conservative government.

'Just as radical'

Asked whether she had done a deal with Mr Smith, she said the two would be "in lockstep" from now on seeking to forge a "strong and united" opposition which "could do its job" under a leader who could "heal" the party.

Mr Smith said he had garnered "significantly more" support than Ms Eagle but praised her courage in coming forward to challenge Mr Corbyn and said he wanted her to be his "right-hand woman" during the leadership campaign and afterwards.

Promising to "move Labour on" from the turmoil of recent months, Mr Smith said he was "just as radical as Jeremy Corbyn" but better placed to help Labour get back into government and "put principles into practice".

Saying he represented a "new generation" of Labour politicians, Mr Smith - a former BBC journalist and lobbyist who was elected to Parliament as MP for Pontypridd in 2010 - said Labour had "been on the sidelines too long" and he was capable of "getting Labour ready to win back the trust of the British people and getting Labour back into power".

The BBC's Laura Kuenssberg said Mr Smith was regarded as "clean skin" having only entered frontline politics relatively recently while Ms Eagle had served in government under Gordon Brown and, crucially, backed the Iraq War in 2003.

Labour leadership election timetable

18 July: Registration to sign up as a registered supporter to vote in the election opened at 17:00 BST

19-20 July: The number of MP nominations for each candidate to be published

20 July: Deadline for people to sign up as a registered supporter closes at 17:00 BST

22 August: Ballot papers start to be sent out in the post (Labour Party members only) and by email

21 September: Deadline for ballot papers to be returned closes at midday

24 September: The result will be announced at a special conference in Liverpool

Both Ms Eagle and Mr Smith quit the shadow cabinet in the wake of the EU referendum result. Ms Eagle threw her hat into the ring first to challenge Mr Corbyn and was later joined by Mr Smith.

The result will be announced at a special event on 24 September on the eve of Labour's party conference in Liverpool.

In a statement on the Labour Party website, Mr Corbyn acknowledged the party was divided but said he was proud of his achievements over the past 10 months and believed he should be given the chance to build on them.

"My vision is built around an economy that delivers for everyone, in every part of the country," he said. "Let's have a comradely debate this summer - and emerge stronger and more united to protect our communities and defeat this Conservative government."