Ontario Premier Dalton McGuinty says he's stepping down as Liberal leader and is also adjourning the legislature to try and negotiate with the opposition parties.

Beaten down by a series of scandals involving air ambulances and hundreds of millions of dollars spent to cancel two gas plants, McGuinty decided he's had enough.

He made the surprise announcements to an emergency meeting of the Liberal caucus, with his wife Terry in attendance, after the government was hit with a second contempt motion over the cancelled power plants.

McGuinty also says he adjourned the legislature because there was little hope of getting the public sector wage freeze passed into law given the severe criticism the opposition parties have been heaping on his minority government.

The government needs the wage freeze for about 481,000 public sector workers to trim the $14.4-billion deficit, and McGuinty says proroguing will give the government time to find out exactly what the opposition parties want in order to approve the plan.

McGuinty says after 16 years as Liberal leader and the past nine as premier, it's time for a new Liberal leader.