Moving closer to a third bid to be mayor of Pittsburgh, former city Councilman Bob O'Connor has resigned his post as the governor's representative for Southwestern Pennsylvania.

Gov. Ed Rendell appointed state Sen. Allen Kukovich, D-Westmoreland, to succeed O'Connor to serve as his liaison to local governments and economic development agencies.

Kukovich, a member of the Legislature for 27 years, was defeated in his bid for re-election to the state Senate in November.

O'Connor acknowledged that his departure from the state post was a prelude to next year's mayor's race, although he insisted that he had yet to make a final decision on whether to run.

"I'm seriously considering running for mayor, and that requires a lot of time and effort and I can't do it while I'm serving the governor,'' said O'Connor, who lost to Mayor Tom Murphy in each of the past two primaries for the Democratic nomination for mayor.

Murphy's margin of victory in their rematch four years ago was a scant 699 votes, less than 1 percent of the total cast. O'Connor said he would make a final decision on the race within the next six to eight weeks, but his candidacy has long been anticipated by other Pittsburgh politicians.

O'Connor's move came as City Council and the Murphy administration were wrestling with a controversial state proposal that would give the city new taxing authority as part of a package designed to restore the city's financial prospects. As a member of the Rendell administration, O'Connor, like the governor, supported the plan, but he refused yesterday to be drawn into a discussion of that or any other issue likely to arise in the race.

"I don't feel comfortable doing anything political as long as I work for the governor,'' said O'Connor, who will leave his appointed post at the end of the week.

City Councilman Bill Peduto, who is one of several Democrats eyeing a run for mayor, said, "There's no question Bob's in the pole position'' at this nascent stage of the campaign.

Peduto, who is up for re-election to his council seat, said he would consider running for both offices concurrently, although he said he wouldn't make up his mind on the mayor's contest until the last possible moment. Before he does, he said, "I want to see who the candidates are and why they are running.''

One almost certain contender for the Democratic nomination is Prothonotary Michael Lamb.

"We're taking a very serious look; we'll make a final decision imminently,'' Lamb said yesterday.

City Controller Tom Flaherty, the chairman of the county Democratic committee, said he is also seriously considering the race.

The biggest question hanging over the Democratic maneuvering is whether Murphy will seek to hold onto his office. The mayor, whose popularity has been buffeted by the struggle over the city's financial plight, has said that he has not made up his mind on a re-election bid and hasn't suggested a timetable for doing so.

Among the legion of local Democrats considering or being mentioned as possible candidates for the Democratic nomination are state Rep. Dan Frankel, D-Squirrel Hill, and Don Walko, D-Northside, and Harry Readshaw, D-Carrick.

Like his colleague, Peduto, Councilman Gene Ricciardi has weighed running, although he is also reportedly considering the possibility of running for district justice. Councilman Sala Udin had also looked at the mayor's race, but he said yesterday that he had decided a against a run and would instead pursue re-election to council.

Kukovich, who was upset in a hard-fought election by Republican Bob Regola, had served two terms in the state Senate and, before that, nine in the state House. He said yesterday that he viewed his new post as a natural extension of his work in the Legislature.