In a two-line written statement, Mr Howard said the party had been loyal and generous to him
He would remain leader as long as it was in the party's best interests and he retained his colleagues' support.
A short while later, Mr Costello told a packed news conference in Canberra that today had not been his best day as deputy leader.
He says, while he will remain deputy Liberal leader and treasurer, he does aspire to become prime minister one day.
Mr Costello says he will have no problems working with the Prime Minister in the future.