A pathway appears to have been cleared for Progressive Conservative Leader John Tory to run for a seat in Ontario's legislature.

CTV Toronto has confirmed that Laurie Scott, MPP for the riding of Haliburton-Kawartha Lakes-Brock near Peterborough, will step aside. In exchange, Tory will name her as his chief of staff.

Tory will officially make the announcement on Friday in Lindsay.

Premier Dalton McGuinty said Tory needs to be inside the legislature.

"Good opposition makes for better government. I spent the vast majority of my career in opposition, so I believe in opposition. We're all better with competition," he said Thursday.

Tory -- a former business executive, CFL commissioner and failed Toronto mayoral candidate --succeeded Ernie Eves as the Conservatives' leader in 2004 and won election in 2005 in Dufferin-Peel-Wellington-Grey near Orangeville.

But he made the decision to take on popular Liberal Education Minister Kathleen Wynne in Don Valley West during the 2007 provincial election, a Toronto riding where he is deeply rooted. Wynne bested him by almost 5,000 votes.

The Dalton McGuinty-led Liberals retained power with a comfortable 72-seat majority. Many in Tory's party accused him of botching the election with his decision to push for public funding of faith-based schools.

Since then, the 25 members of the Progressive Conservative caucus had generally balked at stepping down to make room for Tory.

Tory had set a deadline of Dec. 31 to find a seat, but then pushed that back to Jan. 9, which is Friday.

Many speculated that Prime Minister Stephen Harper might make life easier for Tory by appointing an Ontario Conservative MPP to the Senate, but Harper didn't do so.

Tory has described himself as a "red Tory," closer in ideology to former premier Bill Davis than Mike Harris of the low-tax, small-government "Common Sense Revolution" period of the 1990s. But many former Harris cabinet ministers hold positions in Harper's cabinet.

The harder-edged faction within the Ontario party still chafes at Tory's leadership.

Some party members have drafted an amendment to the party's constitution. It would require the leader to have a seat within 18 months of an election.

The party will debate the issue at a convention in Niagara Falls next month.

Whatever disgruntlement exists within the caucus about Tory's status hasn't resulted in public statements from MPPs. Tory kicked former Conservative MPP Bill Murdoch out of caucus after Murdoch said it was time for his leader to think about another job.

With a report from CTV Toronto's Paul Bliss and files from The Canadian Press