OTTAWA — Former finance minister John Manley has turned down Prime Minister Paul Martin's offer to become Canada's next ambassador to the United States.

The two former leadership rivals had a final conversation over the telephone about the plum Washington post before Manley told the prime minister he preferred to stay close to his Ottawa home.

"He declined the gracious offer for personal and family reasons," a source close to Manley said Monday.

The former finance minister's decision to cut all ties to the Martin government leaves him with more room to operate should he choose to make another run at the Liberal leadership in the future.

It will also allow Manley to choose among several lucrative job offers that have been made to him since he decided last month to leave politics.

"He has a lot of opportunities in front of him now that will either keep him in Ottawa or close to Ottawa," an intimate of Manley said.

Manley, a longtime friend of former prime minister Jean Chretien, has three daughters still attending school.

He has enjoyed an excellent relationship with White House officials, particularly Tom Ridge, responsible for U.S. homeland security.

He did offer to help the new prime minister on any individual Canada-U.S. project that might benefit from his experience.

Manley's decision not to take up the post leaves Martin with a highly sought-after post to fill. Former industry minister Allan Rock accepted the ambassadorship to the United Nations last week.