James Otis, the owner of five of Mahatma Gandhi's [Images] personal items, on Thursday decided to withdraw from the controversial auction of the prized memorabilia, hours before they were due to come under the hammer.

Sources close to Otis said he would formally communicate to the New York-based Antiquorum Auctioneers that he would like to withdraw from the auction.

There was no immediate word from the auctioneer, who have maintained that the auction will take place as scheduled at 3 am on Friday, IST.

The auctioneers are reported to be reluctant to pull the five items off the auction bloc at the last moment, sources said. Parleys are underway to resolve the issue.

Otis's adviser Lester Kurtz was quoted by TV channels as saying that Gandhi's items were not up for auction. Otis' move came after intense negotiations between him and diplomats at the Indian Consulate in New York.

Earlier, Otis had set new conditions including that India shift priorities from military spending to health care, especially for the poor, if he has to call off the auction. The Indian government stood firm in its response and rejected the conditions. Prime Minister Manmohan Singh [Images] had instructed the diplomats to 'do whatever possible to procure the items'.

The fate of the items that include Gandhi's pocket watch, a pair of sandals, a plate, a bowl and his rimmed glasses, was not immediately known.