Kerry still carries some sway among Democratic donors, fundraisers and activists who could assist Obama in a close-run contest against Hillary Clinton, who is thought to be favoured by the party's establishment.

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Since losing the 2004 race, Kerry has kept his network of supporters intact. He has an email network of three million supporters, according to aides.

He was Obama's political benefactor once before, selecting the relatively unknown Illinois senatorial candidate to deliver the keynote address at the 2004 Democratic National Convention which confirmed Kerry as the party's presidential candidate.

"I want to thank John Kerry for his support in this campaign, but more importantly for his service to this nation," Obama told the rally at the College of Charleston.

'A better tomorrow'

In his speech, Kerry did not mention Clinton by name, but dismissed those that had attacked Obama's lack of experience.

Taking on Clinton's charge that the Illinois senator is offering the American people "false hopes," Kerry said: "My friends, the only charge that rings false is one that tells you not to hope for a better tomorrow.

"The cynics may have spoken, but it's the people who will decide."

John Edwards, who became Kerry's running mate four years ago after failing to win the nomination on his own, said he respected the decision.

"When we were running against each other and on the same ticket, John and I agreed on many issues," he said in a statement.

"I continue to believe that this election is about the future, not the past, and that the country needs a president who will fight aggressively to end the status quo."

Obama v Clinton

Heading into contests in Nevada and South Carolina, the race between Obama and Clinton is finely poised, after he took the Iowa caucuses only to see a resurgent Clinton win in New Hampshire.

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Edwards is running third in national polls, but he faired well in Iowa, beating Clinton to second place, and is campaigning hard in his native South Carolina ahead of nominating contests in 22 states on February 5.

Meanwhile, Bill Richardson pulled out of the race for the Democratic nomination after a poor showing in New Hampshire and Iowa.

"I gave this race the best I have," the New Mexico governor said, quitting ahead of January 19 caucuses in Nevada, where polls suggest he is well behind despite the state's large Hispanic community.

Richardson is reportedly not endorsing either of the two Democratic frontrunners but will free up his supporters to back the eventual nominee.

"I am confident that the next president of the United States will implement much of what we have been urging for the last 12 months," he said.

Republican contest

In the Republican race candidates were trying to win over conservatives ahead of the next contest on January 15 in Michigan, by playing up plans to extend Bush's tax cuts beyond their 2010 expiration.

Rudy Giuliani, the former New York mayor, unveiled a new plan that would preserve the tax cuts but also allow taxpayers to opt for a simpler tax code with three brackets.

John McCain, who voted against the cuts in 2001, said in Michigan this week that he now supports making them permanent because of economic tough times.

The 71-year-old senator from Arizona became a serious contender for the nomination after a solid win in New Hampshire.