John Ashworth, director of the London School of Economics, says he has not ruled out a second term of office if it were offered to him.

Dr Ashworth's six-year fixed term appointment ends in September 1996, and there were reports that he "planned to quit" after he told the academic board he was not seeking to extend his term.

"This seems to have been interpreted as a wish to jump ship or retire, but it was intended quite genuinely, and perhaps a little naively, to signal to my colleagues that I think it important that the LSE should be able to choose its next director as unconstrained by outside forces as possible," he said.

He believed the selection committee for the director, which is routinely set up during the director's second last year, should have freedom in its work. "I've thoroughly enjoyed my time here and if they wish me to continue, I'd be happy to talk to them about it."

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He and the Department for Education also dismissed reports that Gillian Shephard, Secretary of State for Education, had asked to meet him to discuss County Hall, his preferred future home for the LSE. But he added that an "interesting situation" was developing, and it would inevitably feature in future talks with Mrs Shephard, who was a supporter of the LSE's Pounds 65 million bid for the building in 1992.

The Government vetoed the bid, but the winning bid from the Japanese Shirayama Corporation has now effectively collapsed and the National Audit Office is reviewing the building's sale.

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Dr Ashworth said County Hall would give the LSE the space and the presence he thought it deserved in London, but stressed that he would not propose a motion for a renewed bid at next month's academic board meeting.

"As with most of life, the devil is in the detail. I can conceive of circumstances in which it might look attractive to my colleagues. Equally, I can think of circumstances in which it would not."

The initiative did not lie with the LSE but with Government, which had previously rejected its bid as too risky, and the school's current policy was to develop around its current site.

But Julian Legrand, professor of health and public policy, said he thought many academics were still enthusiasts for the scheme.

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Lay governor Margaret Hodge, MP for Barking, said she would welcome the bid back on the agenda. "The decision not to let the LSE have County Hall was shortsighted and a disbenefit to London. If it is not to be used as the seat for London government, LSE is a more appropriate use."