A senior Liberal MP is calling for his leader Stephane Dion to "signal his intentions" on whether he will step down.

"I think the best thing that would happen for the party, and indeed for Mr. Dion, would be if he gives a signal as early as possible," Joe Volpe told CTV's Mike Duffy Live Thursday.

Volpe pointed out that the Liberals have an impending convention in May 2009 and Dion needs to let the party know if that conference is going to become a leadership convention.

When asked if Dion should quit, Volpe responded that "Dion has earned the right to stay on probably as an interim leader."

If Dion doesn't resign, he'll automatically face a vote of confidence at the convention -- which few predict he could survive.

Volpe said that Dion has had almost two years as leader and that it appears that behind the scenes many are unhappy with him.

He said that he wouldn't want Dion to be subjected to internal pressure to quit from his own party.

Volpe said in light of the recent election results his party needs to start a rebuilding process.

"Clearly it seems that no one is going to give (Dion) that chance to do that rebuilding," he said. "I'd like him to go out with some dignity."

Dion spent his second straight day out of the public eye as he ponders his political future after a disastrous showing in Tuesday's election.

CTV's Ottawa Bureau Chief Robert Fife  spoke with insiders revealed that Dion is ambivalent about whether to remain as Liberal Leader, but that his wife, Janine Krieber, wants him to stay on.

Fife said Dion really has no other choice than to eventually step down.

"His advisers say understandably he's very tired, it's been a very rough campaign, he's absorbing the losses and he's weighing his options at this time," Fife said.

The Liberals campaigned on an unpopular carbon tax and ended up winning only 76 seats, their poorest showing since 1984. Before the election was called, the Liberals held 95 seats in Parliament.

Dion was warned by senior Liberals before the election that if he ran on a carbon tax it would result in electoral disaster.

"He ignored the advice... and it did the Liberal party in," Fife said.

Meanwhile, the frontrunners to replace Dion -- Liberal MPs Bob Rae and Michael Ignatieff -- have already organized their campaigns, Fife said.

"These people were calling up very experienced Liberals that I know to get them on board even before the election was called," Fife said.

He added that Gerard Kennedy and Martha Hall Findlay will also likely run again for the leadership.

Additionally, the Liberals have some young stars -- Dominic LeBlanc, Justin Trudeau and David McGuinty -- who could try to make a bid for the leadership, Fife said.

"They've got a huge rebuilding ahead of them, they really are in trouble financially, they've got to get new policies, they've got to build a grassroots," Fife said.

"But this is a very strong and vibrant party and anybody who counts out the Liberal party is making a big mistake."