Government will withdraw the Independence Referendum Act 1994 on Friday and introduce a new bill, The Royal Gazette has learned.

Sources said the new bill, which will not be debated on Friday because it will only receive the first reading, would make the following changes in the United Bermuda Party's plan for a Commission of Inquiry and referendum on Independence: The Commission of Inquiry, which must be appointed by the Governor, would be scrapped.

A new commission, created by Parliament to report to Parliament, would be set up.

The Governor, instead of naming the commission members after consulting with Government and the Opposition, would name two of seven commission members. The Government would name three members and the Opposition two.

Wording of the new bill would hold out the possibility that a referendum on Independence could still be held this year. The commission would have to report within six months of its appointment, and the referendum would have to be held within one year.

Two-thirds of the electorate would have to turn out for the referendum before any mandate for Independence could be acted on.

Given a two-thirds turn-out, a simple majority of votes cast would still be considered a mandate for Independence.

Details of the new bill were finalised yesterday at a meeting of the UBP Parliamentary Group and later taken to the full caucus. Government's referendum plans recently met renewed dissent from within the UBP.

Sources said the party made an about-face on plans for an inquiry under the Commission of Inquiry Act 1935 after "three or four'' MPs said they would "reserve their positions'' on whether to support an Opposition motion rejecting the inquiry.

It was not known yesterday whether Opposition Leader Mr. Frederick Wade would proceed with that motion after Government withdrew its bill that was earlier amended in the Senate.

Mr. Wade said yesterday he would wait until Friday to decide, but he planned to proceed with his motion.

Premier the Hon. Sir John Swan could not "withdraw'' the Commission of Inquiry because there was no legislation before the House to create the commission, Mr. Wade said. "It's a matter of policy.'' The Royal Gazette has also learned that the Premier's leadership was endorsed by a 17-3 vote at last Thursday's meeting of the UBP's Parliamentary Group.

The vote occurred after the Hon. Ann Cartwright DeCouto rose and read a statement critical of the Premier's "presidential'' style of leadership, sources said.

Mrs. Cartwright DeCouto, who resigned her Cabinet post in January over the introduction of the Independence issue, had drafted the statement with caucus veteran the Hon. John Stubbs.

It is understood the statement called on the Premier to step down. The call was met with a chorus of support for the Premier by other MPs and, eventually, a call for a vote of confidence in Sir John.

The resulting secret ballot vote recorded three MPs against the Premier and 17 in favour.

Later, Government Whip and caucus chairman Mr. John Barritt emerged and told reporters "there was a vote of overwhelming confidence in the party leader and Premier, Sir John Swan.'' The new bill is to be debated on May 20 amid calls from business leaders to get the Independence question settled one way or the other as soon as possible.

Due to opening ceremonies of the British-American Parliamentary Group that is meeting in Bermuda, regular House business will not begin until 2.30 p.m. on Friday.

The withdrawal of the referendum bill means debate on Dr. Stubbs' bill to legalise gay sex might proceed on Friday, though it may wait until May 13.