Britain's Conservative Party is locked in a bitter leadership contest in the aftermath of a bruising loss in June's general election.

There is a battle going on in Britain for control of the Conservative Party.

The once powerful institution, popularly known as the Tory party, is trying to salvage its future after its second straight electoral defeat at the hands of the Labor Party, led by Prime Minister Tony Blair.

Ballots have been sent out to 300,000 Conservative Party members. They are choosing between former Finance Minister Kenneth Clarke and the party's current defense spokesman, Iain Duncan Smith.

The leadership contest has turned nasty over the issue of Europe. Mr. Duncan Smith is favored by what are known as "euro-skeptics." He has vowed that Britain will never give up the pound in favor of the euro, the single currency that 12 European Union nations are adopting in January.

Mr. Clarke projects more tolerance toward Europe. He backs Prime Minister Blair's plan to hold a referendum at an unspecified future date on whether Britain should replace the pound with the euro.

The argument over Europe dominated the one and only televised debate the candidates have held.

Mr. Duncan Smith claims his doubts about the euro are in tune with most Conservatives. "The only way you can settle this is by leading through the majority of the party who do not want to enter the euro," he said. "In fact, the majority don't want to enter the euro in the country."

Mr. Clarke disagrees, arguing that the Tories are out of step with most Britons when it comes to Europe - and that is hurting the party. "When you think of the Conservative Party, you think of euro-phobia," he said. "And if we are identified as a single-issue movement in that way, we are not going to make the progress we need to, to win at the next election."

Mr. Duncan Smith has picked up some powerful support, most notably the endorsement of former Prime Minister Margaret Thatcher, who recently said a Clarke victory would be a "disaster" for Conservatives.

However, according to former Prime Minister John Major, Mr. Clarke is the best choice to attract moderate, nonaligned voters. He calls Mr. Duncan Smith "very rightwing" and he says the Tories cannot win with a single-minded focus on Europe.

"I am sick and tired, as someone who loves the Conservative Party and has spent all his life in it and always will be in it," said Mr. Major. "I am sick and tired of seeing the people that I come from in the constituencies let down time and time and time again by people in parliament pursuing this one single philosophical point at the expense of what concerns the country as a whole."

Some Tories fear squabbling will turn off voters and relegate the Conservatives to third-place in British politics, behind Labor and the Liberal Democrats.

However, for former Conservative finance minister Norman Lamont says the heated words are just part of a rough-and-tumble election campaign. "I think it's inevitable," he said, "that there is a bit of this when there is an election, but then an election is about fighting to get a result and I think when it's all over the party will come together."

Tory voters are now mailing in their ballots and the results will be announced September 12.