LONDON, Jan 22 (Reuters) - Prime Minister David Cameron's Conservative party became favourites to win the most seats at a national election in May for the first time in three years on Thursday, according to bookmaker Ladbrokes, overtaking its nearest rival Labour.
The election is set to be the closest in a generation, with opinion polls showing Labour and the Conservatives almost level pegging, and both having lost support to nationalist and single-issue parties.
Ladbrokes said that while neither party was expected to win an overall majority, the Conservatives were now favourites to win the most seats due to rising support for the Scottish National Party (SNP), and a jump in popularity for the Green Party, both of which threaten to take votes from Labour.
"The money now says that David Cameron could be staying on in Downing Street," Matthew Shaddick, head of political odds at Ladbrokes said, announcing the firm had cut the odds on the Conservatives and raised those on Ed Miliband's Labour.
"Ed Miliband is now fighting a war on two fronts, with the SNP hammering Labour in Scotland and the Green surge threatening to hand several seats to the (Conservatives) Tories in England."
An opinion poll from YouGov on Thursday put Labour on 34 percent, just ahead of the Conservatives on 33 percent. The anti-EU party UKIP polled at 14 percent, the Greens at 8 percent and the Liberal Democrats, currently junior coalition partners, at 6 percent. (Reporting by William James; editing by Stephen Addison)