OTTAWA (Reuters) – The main opposition party in Canada, stunned by its leader's serious illness, elected an interim chief on Wednesday and dismissed speculation that the party could start to break up.

New Democratic Party leader Jack Layton, who took the left-leaning party to its best ever performance in the May 2 election, announced on Monday he was stepping down temporarily to deal with a second bout of cancer.

Layton, who looked gravely ill, vowed to return for the resumption of Parliament on Sept 19. The party relies heavily on his charisma and experience and some political observers predict the NDP could struggle without him.

"These are terrible circumstances, no doubt about that," NDP president Brian Topp told reporters. "(We) don't celebrate what is happening here. But I think we've got the bench strength in this team to step forward and handle it."

NDP members of Parliament met in Ottawa on Wednesday and, after consulting with Layton by phone, nominated political newcomer Nycole Turmel to be interim leader. The party's leadership will officially confirm the choice on Thursday.

Turmel, in her late 60s, would not be a candidate if Layton failed to return and the party had to run a leadership race.

"She'll do a great job. More importantly we know she's just keeping the spot warm for Jack," Member of Parliament David Christopherson told reporters.

Despite such optimism, the party is already making clear that Layton could be off work longer than planned.

"If Jack Layton needs more time to recover, no one in the party will tell him he can't take that time," Topp said.

Party legislators, who said Layton looked to have successfully beaten off the prostate cancer that was diagnosed last year, acknowledged they were shocked by his new illness but said they remained upbeat.

A wave of so-called "Laytonmania" helped the NDP elect enough members of Parliament on May 2 to become the main opposition party for the first time.

"Jack himself has been so pivotal in building this team ... but we've learned from our leader and I think we will rise to the challenge of what we have to do," said Libby Davies, one of the party's two deputy leaders.

The other deputy leader is Thomas Mulcair, who is the favorite to eventually replace Layton.

The governing Conservatives -- who favor low taxes and a tough-on-crime approach -- won a majority of seats the House of Commons in the May 2 election and will not face reelection until October 2015.

(Reporting by David Ljunggren; editing by Peter Galloway)

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