In a reversal, House Democratic leader Nancy Pelosi (search) of California has concluded the party needs a candidate in the Oct. 7 recall election aimed at Gov. Gray Davis (search), party sources said Thursday.

The sources, who spoke on condition of anonymity, said the Democratic House leader has joined in a series of conference calls in recent days with fellow Democratic lawmakers as and other officials seeking a consensus candidate.

Pelosi issued a statement Thursday calling actor Arnold Schwarzenegger (search)'s decision to enter the race as a Republican an extension of House Majority Leader Tom DeLay's "extreme Republican agenda ... using a familiar public face to promote poisonous policies that favor special interests over the public interest.

At the same time, her statement was silent on the issue of having a Democrat on the ballot. "The [Democratic congressional] delegation will continue our discussions about the best way to defeat the recall. We will determine our course of action after the filing deadline has passed," she said.

That was a shift from a statement issued on July 24, when Pelosi said, "In order to defeat the recall, it is essential that no other Democratic name be on the ballot." Her shift further underscores Davis' precarious position in an accelerating recall race.

As Schwarzenegger was announcing his candidacy so was Democratic Lt. Gov. Cruz Bustamante (search). Democratic Sen. Dianne Feinstein (search) announced earlier Wednesday she would not place her name on the ballot.

Other Democrats have been saying for days that the party needs a candidate in the election, in part to bring out voters who can defeat the recall, and in part to prevent the governorship from falling to the Republicans if Davis loses.

The Democratic party sources said another possible candidate whose name has come up in conference calls among California Democratic lawmakers is Leon Panetta, a former congressman who lives in the Monterey area. Panetta was a White House budget director and chief of staff under former President Bill Clinton.