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The contest to succeed Ieuan Wyn Jones as Plaid Cymru leader will begin early next year, the party has announced.

The aim is to have a new leader in place by mid-March, before next May's local elections.

Mr Jones has already announced his decision to stand down in the wake of a disappointing performance in the assembly elections earlier this year.

A leading party figure, Dr Eurfyl ap Gwilym, is leading a review of the party's strategy.

His review is expected to be completed by the end of the year, which means nominations for the leadership will open in January.

Mr Jones said: "I look forward to an important contest for Plaid Cymru, where the proven talent that we have in our current team of assembly members can step up and show their ambition to lead the party, and their ambition for Wales.

"With the individuals we have, it is clear that the future of the party will lie in good hands."

Plaid slumped to 11 seats at May's election - its worst tally since the assembly was established.

After four years of governing in coalition with Labour, Plaid is now the assembly's second-biggest opposition party, behind the Conservatives.

Mr Jones, who first took up the leadership of Plaid in 2000, added: "Under my leadership, Plaid Cymru has emerged from a successful period in government and has continued to push the agenda forward since the May elections.

"We have operated as a constructive and robust opposition to the new Labour government since the election and highlighted their lack of ambition for Wales.

"We have also set out the alternative vision we have as a party and we will continue to do that under my leadership until it is time for me to hand over the reins to a new leader."

Plaid national chair Ellen ap Gwynn said the party's national executive committee (NEC) would be asked to ratify arrangements for a leadership election at its next meeting. She said she would ask the NEC to approve a timetable that puts a new leader in place by the time of the spring conference in March 2012.

She said: "Between now and the election of the next leader we're keen to ensure that as many people as possible can play their part in moving our party forward.

"The coming months will be a great opportunity for supporters, new and old, to get involved in the process of renewing Plaid and to be part of the election in the new year of Plaid's new leader.

"I'm pleased that Ieuan will continue the important work of leading the party until the next leader takes over next spring.

"His contribution to the party and the nation has been enormous and I'd like to thank him once again for his continued leadership of Plaid Cymru."

Lord Elis-Thomas, aged 64, who led Plaid 20 years ago, has been nominated by his local party to run for the job. Ceredigion AM Elin Jones has said she would seriously consider running.

Any member of Plaid's assembly group can put their name forward for the position. The leader will be chosen through a postal election of party members, using the alternative vote.