By Kylie MacLellan, Alistair Smout and Elizabeth Piper
LONDON (Reuters) -Britain's former finance minister Rishi Sunak held onto his lead in the race to become Britain's next prime minister on Monday as another hopeful was knocked out, leaving four candidates in an increasingly bitter contest to replace Boris Johnson.
Sunak got 115 votes in the third ballot of Conservative lawmakers on Monday, ahead of former defence minister Penny Mordaunt on 82 and Foreign Secretary Liz Truss on 71.
Since Johnson said he would resign earlier this month after his scandal-ridden administration lost the support of many in his ruling Conservative Party, the race to replace him has taken an ugly turn with several contenders turning their fire on the frontrunner Sunak.
He has faced criticism on everything from his record in government to the wealth of his wife by those vying to make it to a run-off between the final two candidates, with foreign secretary Truss and Mordaunt, currently a junior trade minister, his most likely opponents.
The chair of the Foreign Affairs Committee Tom Tugendhat, a former soldier and Johnson critic who has never had a role in government, was eliminated from the leadership contest on Monday, after securing the fewest votes with 31.
Former equalities minister Kemi Badenoch came fourth in the ballot with 58 votes.
The governing Conservative Party's 358 lawmakers will whittle the field down to the final two this week, eliminating the candidate with the fewest votes each time. The results of the next ballot are due at 1400 GMT on Tuesday.
A new prime minister will then be announced on Sept. 5, after the Conservative Party's 200,000 members cast postal ballots over the summer.
The race has become focused on pledges, or non-pledges, to cut taxes, at a time when Britain's economy is beset with spiralling inflation, high debt and low growth that have left people with the tightest squeeze on their finances in decades.
Truss has also come under fire for saying she would change the Bank of England's mandate.
At a televised debate on Sunday, candidates attacked each other over their records, and Truss and Sunak pulled out of a planned third debate on Tuesday, amid concern among Conservatives about candidates attacking their party colleagues.
"The nature of the Conservative Party is to have vigorous debate and then coalesce once a new leader is selected. I have no doubt that the same will happen on this occasion," Conservative former minister David Jones told Reuters.
Sunak extended his lead over Mordaunt, who lost support and registered one fewer vote than she had in round two.
Bookmaker Ladbrokes said on Monday Truss, who got seven more votes in round three than she had in round two, was now the second favourite, ahead of Mordaunt but behind Sunak.
Truss's campaign tried to buttress their argument for lower taxes by citing a report by The Centre for Economic and Business Research, a private sector think tank, showing there was more room for manoeuvre from higher tax receipts.
But a top Bank of England official, Michael Saunders, pushed back at her suggestion the government should set a "clear direction of travel" for monetary policy, saying the foundations of Britain's framework were best left untouched.
"The government very clearly does not set the direction of travel for monetary policy," Saunders, one of nine members of the interest rate-setting Monetary Policy Committee, said at a Resolution Foundation event in London.
(Reporting by Elizabeth Piper, Kylie MacLellan, Alistair Smout, David Milliken and Andy Bruce, Editing by Hugh Lawson, William James and Toby Chopra)