Liberal MP and former party leadership hopeful Bob Rae isn't suggesting Stephane Dion is on the way out after Tuesday's devastating loss, but he isn't ruling it out either.

After running an election campaign centred largely on an unpopular carbon tax during a time of economic uncertainty, musings about the Liberal leader's future began as soon as the polls started to lean towards a Conservative win.

When the dust settled the Liberals wound up with 76 seats, their poorest showing since 1984.

Rae stopped short of saying Dion's carbon tax was a mistake but suggested Canadians didn't seem to embrace the plan.

"It's obviously a good idea from the point of public policy. From the point of politics clearly there was a reaction and a response to it in a number of parts of the country, and that's a very natural reaction and that's something we're going to have to reflect on," Rae told CTV's Canada AM on Wednesday.

He said the campaign was Dion's first, and he was successful in holding Conservative Leader Stephen Harper to a minority government.

Rae also said the Liberal Party has a leadership review scheduled for May in Vancouver, and it will be up to party members to determine Dion's future.

He called him a man of principle and courage and said the fact he survived the bumpy ride that has characterized much of the campaign is a victory for Dion.

"He's led a very strong campaign from that perspective and I think it's to his credit that he's come through this -- the middle and end of the campaign was very strong. He came through it very strong as a human being," Rae said.

In the day-after post-election fog, CTV's Tom Clark was less diplomatic about Dion's future.

He said nothing is up for debate. Dion's failure to bring his party back to power, Clark told Canada AM, is the final straw that will seal his fate.

He said there is little chance he will remain at the helm of the party.

"Stephane Dion's era was over, you could say, the moment he walked out of the Montreal Convention Centre after he was elected leader and the reason I say that is because so many senior Liberal people walked," Clark said.

"He's at the point now where even his own people can't make an argument for him to stay on."

Stephen LeDrew, past president of the Liberal Party of Canada, said Wednesday he still stands by controversial remarks he made during the campaign that Dion was steering the party towards a desperately needed "drubbing."

He had called Dion's platform "incomprehensible or just plain dumb" and said the party needed a devastating loss in order to properly rebuild.

He told Canada AM there's little doubt Dion is on the outs.

"The Liberal party has to find its roots, it has to get a new leadership. I thought Mr. Dion's statements last night were absolutely ridiculous, saying the people had elected him to be leader of the opposition and he's going to stay to do that. He lost and he lost poorly," LeDrew said.

He said Dion, after taking time to reflect, is likely to take the decision himself to step down before the leadership convention in May.

Grit insiders told CTV's Beverly Thomson on Tuesday night that deputy party leader Michael Ignatieff -- a former contender for the leadership job -- was already preparing a run at the party's top job.

Those insiders also told Thomson that Ignatieff's team was getting ready for the Vancouver convention.

As dismal figures poured in from across the country Tuesday night, one party insider told The Canadian Press the results were an "epic disaster."