Liberal Leader Stephane Dion is expected to resign this week and Liberal MP Dominic LeBlanc has dropped out of the leadership race and will support rival Michael Ignatieff, CTV News has learned.

"Michael Ignatieff pretty much has this leadership race wrapped up," CTV's Chief Political Correspondent Craig Oliver told CTV Newsnet Sunday evening.

Oliver said LeBlanc will make the announcement Monday, according to senior officials. He said LeBlanc will bring four MPs and five senators with him to back Ignatieff.

The Liberal caucus is to meet on Wednesday, which will include 57 MPs who support Ignatieff, Oliver said. They would "almost certainly" vote to make Ignatieff their parliamentary leader, putting immense pressure on Liberal MP Bob Rae to drop out of the leadership race.

But the Rae camp says that choosing a leader behind closed doors is not the right move for the Liberal party.

Earlier on Sunday, Ignatieff said the Liberal caucus may "accelerate" the process to replace Dion, and warned that Prime Minister Stephen Harper's government will fall if it does not produce a strong budget next month.

In an interview on CTV's Question Period, Ignatieff declined to echo former deputy prime minister John Manley's call for Dion to immediately step down.

However, he did suggest the caucus wants a new, permanent Liberal leader already in place should the opposition parties choose to vote down Harper's government when the budget is tabled on Jan. 27.

"I think there is an emerging feeling in the caucus that given the importance of this vote in late January, it would be appropriate to have a leader in place, a permanent leader in place, and I think it's fair to say that the caucus is considering various options about how to do that, to accelerate our leadership process," Ignatieff said Sunday.

In a separate interview later on Question Period, Rae repeated Ignatieff's call for a decision on the Liberal leadership before Parliament resumes on Jan. 26.

"We need to have the leadership race moved up and we need to make sure that we've got a broad consultation with the party before the end of January," Rae said.

Dion had planned to stay on until a leadership convention in May. However, as plans for the coalition have emerged, many have called for Dion to step aside before then.

Harper 'will go down'

Later in his interview, Ignatieff warned that Harper's government "will go down" should it fail to produce a comprehensive budget in January that offers help to Canadians in the ongoing economic crisis.

Ignatieff said the opposition party leaders should wait until they can read the Conservative budget before deciding the current government's fate.

"But Mr. Harper has to understand here that if he fails to produce a budget in the national interest of Canada, he will go down," Ignatieff said.

It's possibly the strongest language Ignatieff has used since the coalition between the Liberals and NDP -- with the support of the Bloc Quebecois -- was formed.

Ignatieff defended the proposed coalition, which threatened to turf Harper's minority government from power during a confidence vote this week, before Gov. Gen. Michaelle Jean accepted Harper's advice to prorogue Parliament.

The coalition offers an alternative to an election should the opposition parties choose to vote down Harper's budget, Ignatieff said.

Both Ignatieff and Rae were quick to blame the political crisis on Harper, and accused him of using divisive rhetoric to characterize the coalition as a deal between the Liberals, the NDP and separatists.

Heritage Minister James Moore echoed Harper's sentiments on Question Period, saying: "I think that Jack Layton and Gilles Duceppe playing this kind of game in order to strategically advance their parties is very dangerous and unwelcome."

Rae said the Bloc cannot use its position in the coalition to advance an agenda.

"The Bloc doesn't have a veto, the Bloc doesn't control anything, the Bloc's not in control of the agenda," Rae said. "And the way the prime minister has described this agreement, the way he has portrayed it to Canadians, I think is not only misleading, I think is horrendously divisive."