Papua New Guinea's governor-general says he was wrong to reinstate ousted leader Michael Somare as prime minister, signaling a possible breakthrough in the country's tense political stalemate.

Governor-General Michael Ogio swore in the government of Mr. Somare last week after the country's Supreme Court ruled that he was illegally removed from power while in Singapore undergoing heart surgeries earlier this year.

But Ogio said Monday his decision was “wrong and invalid,” and that he now recognizes the government of Peter O'Neill, who was elected by parliamentary leaders in August.

However, Mr. Somare refused to concede defeat Tuesday, telling the Australian Broadcasting Corporation that he remains the country's legitimate leader.

Australian constitutional lawyer Anthony Regan says early elections may be the best way to solve the political standoff, which has left two governments in place in the impoverished island nation.

Elections are currently scheduled for June 2012.

Regan notes that Papua New Guinea, with a population of seven million people is the biggest country in the Island Pacific. It also is rich in natural resources, such as natural gas, oil and timber. Regan says political instability in Papua New Guinea could thus impact the region.

U.N. Secretary-General Ban Ki-moon has called for both sides to exercise restraint, saying the crisis should be resolved peacefully and in accordance with the country's constitution.

Mr. Somare led Papua New Guinea to independence in 1975 and was serving his third term as prime minister when he took a medical leave of absence in December 2010.