Winston Churchill saw empires of the mind.

Australian Prime Minister John Howard went for coffee at McDonald’s.

Faced with the first serious challenge to his leadership in 10 years, after his ambitious deputy demanded this week that he step aside by Christmas, Howard went back to his roots in working-class Sydney suburbs.

Australia’s most successful politician in a generation, and a staunch US ally, appears to have returned reinvigorated, eager to put down Treasurer Peter Costello’s challenge and seek a fifth straight term at elections due in late 2007.

"It’s very significant he has gone out there, it convinces me further that he is going to contest the next election," Monash University politics lecturer Nick Economou told Reuters.

At the start of what promised to be a watershed week in national politics, Costello publicly contradicted Howard over the existence of a secret leadership succession deal made in 1994, two years before their Liberal party and National coalition partners won power.

By Thursday, Costello was meekly refusing to answer questions on whether he might try to force a leadership vote while Howard, who turns 67 this month, spoke of feeling committed to his job and stimulated by it.

It was a dramatic turnaround for Costello, a 48-year-old economic liberal who has overseen 10 years of sustained growth, tax cuts and budget surpluses but still struggles to win voters over.

Analysts say it was no coincidence that the populist Howard, Australia’s second-longest serving prime minister, made two public appearances in suburban Blacktown on Wednesday.

Mobbed by middle-aged women at a shopping mall, he also made an impromptu stop for coffee at a McDonald’s restaurant, where he spoke to about 30 surprised diners.

"It’s actually a better way of finding out how people are thinking than some events that are more pre-arranged," Howard told local radio.

"They were a great cross section of my fellow Australians.

It was very interesting," he said.

Economou said electorates like Blacktown saved Howard’s bacon in 1998, when he was re-elected despite winning only 48.2 percent of the two-party preferred vote.

Howard, who grew up not far from Blacktown and whose middle name is Winston after the British war-time leader, has never forgotten the people who live on what local media describe as "Struggle Street."

They are the kind of people who ring talkback radio stations to complain about high fuel prices, and how hard it is to find places at childcare centers because Mum and Dad both have to go to work to make ends meet.

Howard spoke on Sydney’s two most popular morning talkback radio shows on Thursday, signaling he was keen to stay on.

It is marginal seats like Sydney’s western suburbs and Western Australia and Queensland states where the ambitious but aloof Costello’s putative challenge appears to have failed.

"Clearly he’s been told to pull his head in, or maybe he’s pulled his head in because he came across as really petulant the last couple of days," Economou said.

Liberal party parliamentarians have also not been won over.

Analysts say Costello has the support of only about 35 members in a caucus of about 100. Economou said the number could be as low as 20.

Fittingly for a sports-mad leader, Howard remains the firm favorite with bookmakers to contest the next election as leader.

Betting agency Centrebet had Howard as an almost unbackable favorite at odds of A.25 ({{MB:DR(ARTICLE:CONTENT):MB}}.94) for a A outlay on Thursday, while Costello had blown out to A.50.