Farage said the Brexit Party will stand down in the 317 seats the Tories won in the 2017 election, and put its “total effort” into the seats held by Labour.
The Brexit Party leader has been under intense pressure to stand aside for the Tories to avoid splitting the the Leave vote and allowing Jeremy Corbyn into Downing Street.
Several Brexit Party candidates have already quit. And Farage’s old Leave.EU ally Arron Banks has urged him to make way for the Tories.
Farage told supporters in Hartlepool: “I will tell you now exactly what we are going to do.
“The Brexit Party will not contest the 317 seats the Conservatives won at the last election.
“But what we will do is concentrate our total effort into all the seats that are held by the Labour Party, who have completely broken their manifesto pledge in 2017 to respect the result of the referendum.
“And we will also take on the rest of the Remainer parties. We will stand up and we will fight them all.”
Johnson welcomed the news, insisting only a Tory majority could deliver Brexit by the end of January.
Labour party chairman Ian Lavery said: “This is a Nigel Farage and Boris Johnson alliance with Donald Trump to sell out our country and send £500m per week from our NHS to US drugs companies.
“We urge voters to reject this Thatcherite 1980s tribute act, which would lead to more savage Tory attacks on working class communities. Our NHS is not for sale.”
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Farage said he made the decision overnight because he feared that standing against the Tories could allow the Liberal Democrats to win dozens of seats in the south of England, which could help Jo Swinson to team up with Corbyn to deliver a second EU referendum.
He also said Johnson’s promise to negotiate a loose free trade deal with the EU that will not see the UK aligning regulations with Brussels was a “significant change” to the Tory approach which meant he could now live with the Tory strategy.
“He said we would negotiate a super Canada-plus trade deal with no political alignment,” said the Brexit Party leader.
“That is a huge change. Ever since Mrs May’s abject speech in Florence, we have been aiming at a close and special partnership with the European Union.
“We had been aiming to stay part of many of its agencies.
“Boris last night signalled a very clear change in direction. I thought to myself overnight, ‘That sounds a bit more like the Brexit we voted for’.”
Labour former minister David Lammy called for a Remainer electoral pact to fight the “Leave alliance” declared unilaterally by Farage.
“Nigel Farage bottling it by standing down in Tory seats shows how vital it is for Remainers to cooperate,” he said.
“We cannot allow this hard right alliance between Boris Johnson and Nigel Farage - dancing to the tune of Donald Trump - to permanently wreck our country.”
Liberal Democrat leader Jo Swinson tweeted: “The Conservative Party are the Brexit Party now.”
Ed Hall, who was going to be the Brexit Party’s candidate in Dover, told HuffPost UK he was “disappointed that local voters won’t have a chance to make a clear choice for Leave”.
“But I understand the tactical point,” he said.
“I suspect holding the Conservatives to their promises is a high risk strategy based on their performance over the last three years, but it’s probably the only one open to us.”
Naomi Smith, CEO of Best for Britain, called on Remainers to use the anti-Brexit campaign’s tactical voting tool to stop Johnson winning a majority.
“Farage has bottled it and hung most of his own candidates out to dry.
“But by standing down Brexit Party candidates across the country, it’s now more important than ever that Remainers use their votes wisely.
“Our best chance of stopping a nightmarish government delivering a hard and damaging Brexit is voting tactically.”