President Hamid Karzai was effectively handed a second five-year term Sunday when his only challenger dropped out of the race, and the Obama administration said it was prepared to work with the man it has previously criticized to combat corruption and confront the Taliban insurgency.

President Barack Obama has been waiting for a new government in Kabul to announce whether he will send tens of thousands of new troops to Afghanistan. The war has intensified, and October was the deadliest month of the eight-year war for U.S. forces.

Former Foreign Minister Abdullah Abdullah announced his decision to quit six days before the runoff election, after last-minute talks led by the U.S. and United Nations failed to produce a power-sharing agreement acceptable to Karzai, according to a Western diplomat who spoke on condition of anonymity because of the sensitivity of the negotiations.

In an emotional speech, Abdullah told supporters that he could not accept an runoff led by the same Karzai-appointed election commission that managed the fraud-marred vote in August. The runoff was set for Nov. 7 after U.N.-backed auditors annulled nearly a third of Karzai's votes as fakes.

"I will not participate in the Nov. 7 election," Abdullah said, because a "transparent election is not possible."

The Obama administration, which had been critical of Karzai's leadership, appeared to accept the outcome.

Senior Obama adviser David Axelrod said most polls showed Abdullah would have lost the runoff anyway, "so we are going to deal with the government that is there."

"And obviously there are issues we need to discuss, such as reducing the high level of corruption," Axelrod said on CBS' "Face the Nation." "These are issues we'll take up with President Karzai."

Secretary of State Hillary Clinton congratulated Abdullah for a "dignified and constructive" campaign and said the United States "will support the next president and the people of Afghanistan, who seek and deserve a better future."

Obama is still weeks away from deciding whether to send more troops. Top White House advisers said Obama's painstaking review, ongoing since early September, would not be hampered by Abdullah's withdrawal.

About 68,000 American troops already have been ordered to report to Afghanistan by the end of the year.

The top U.S. and NATO commander in Afghanistan, Army Gen. Stanley McChrystal, wants the Pentagon to send him an additional 40,000 troops to prevent the Taliban from letting al-Qaida once again use Afghanistan as a haven — as it was in the days leading up to the Sept. 11, 2001, terror attacks.

Despite misgivings over Karzai, the U.S. has little choice but to support a leader who was once the toast of Washington for his charm, his fluent English and his role as a conciliator in the wake of the Taliban collapse. Fluent in both major Afghan languages, he could reach out to different ethnic groups, including his fellow Pashtuns who also form the overwhelming majority of the Taliban.

But critics say he has been reluctant to rein in some of the former warlords whose support he sought to bolster his own political power but who are allegedly responsible for much of the corruption that plagues the government.

His own half brother Ahmed Wali Karzai has been rumored to be involved in the drug trade, charges that he vigorously denies.

Karzai insists he fell out of favor in Washington when he openly criticized U.S. military tactics, including the heavy use of air power that has killed many civilians. McChrystal has ordered troops to use air power sparingly to avoid turning Afghans against the NATO mission.

Abdullah stopped short of calling on supporters to boycott the polls — a move U.S. officials feared would have enflamed tensions. He also urged his followers "not to go into the streets" to protest the election.

"The people have the right to have a fair election," Abdullah said. "But this election was a failure. It was not independent. It was not transparent."

Karzai's campaign spokesman, Waheed Omar, said it was "very unfortunate" that Abdullah had withdrawn but insisted that the Saturday runoff should proceed as planned.

"We believe that the elections have to go on, the process has to complete itself, the people of Afghanistan have to be given the right to vote," Omar said.

Some analysts believed Karzai wanted a runoff as an affirmation of his leadership after the humiliation of having so many of his August votes stripped away.

However, given the risk of Taliban attacks, the expense and the huge logistical challenge, it seemed doubtful that the second round would be held.

"It's difficult to see how you can have a runoff with only one candidate," U.N. spokesman Aleem Siddique said.

Abdullah's withdrawal was the latest chapter in a deeply troubled election, the first run by Afghans since the fall of the Taliban in 2001.

The process has been marked by delays, fraud, Taliban violence and an internal dispute within the U.N. that led to the dismissal of the American deputy chief, who accused his boss of failing to prevent cheating.

After the U.N.-backed panel confirmed massive fraud, Karzai accepted a runoff but only under intense U.S. pressure. The U.N.-backed panel challenged figures from the government election commission showing Karzai had won the August vote with an absolute majority in the 36-candidate race.

Once the runoff was called, Abdullah put forward several demands, including replacing the top three officials in the election commission. When Karzai refused, Abdullah's supporters said last week he would quit the race.

U.S. Ambassador Karl Eikenberry and the U.N. chief Kai Eide negotiated with the two camps late into the night Saturday about a power-sharing deal, according to the Western diplomat.

But the negotiations broke down early Sunday when Karzai refused a formula for dividing Cabinet posts. If the deal had been accepted, Abdullah would have conceded rather than simply withdraw his candidacy, the diplomat said. Abdullah's decision not to call for a boycott indicated he was open to future talks.