BLOOMINGTON, MINN., OCT. 25 -- Jon Grunseth, the gubernatorial challenger in trouble over reports he swam nude with teenage girls in 1981, announced late tonight he will stay in the race after planning earlier to withdraw.

"I came here tonight to withdraw from this race," Grunseth told about 100 supporters. "But there has been just an incredible outpouring of love . . . and prayer. . . . We are going to press forward no matter {what}."

Grunseth, 44, had been running close to Gov. Rudy Perpich (D) before Oct. 15, when two women charged in sworn statements that Grunseth encouraged them to join him in a nude swim in 1981, when they were 13 and 14. Grunseth denied the allegation but had been under increasing pressure from his party to quit the race. He had consistently vowed to remain on the ballot.

A Grunseth camp source had said earlier today that Grunseth would throw his support to Cal Ludeman, a farmer and former state legislator who was the Republican candidate for governor in 1986 because Grunseth, a moderate-conservative, did not want to automatically hand the GOP spot on the ballot to Arne Carlson, a conservative who launched a write-in campaign on Monday after losing to Grunseth in the Sept. 11 primary.

Elam Baer, executive director of Grunseth's campaign, met privately with Sen. Rudy Boschwitz (R-Minn.), who said during a swing through southern Minnesota earlier in the day that Republicans could not win the governorship with both Carlson and Grunseth in the race.

"We have a situation where two Republicans are running and one Democrat is running," Boschwitz told reporters. "Our base simply is not big enough to cut it in half."

Various state Republicans have expressed concern Grunseth would drag down the entire ticket and were urging him to drop out. Boschwitz was among them, at least privately.

A Minneapolis Star Tribune poll showed Boschwitz in a statistical tie with Democratic challenger Paul Wellstone. Boschwitz had 48 percent, Wellstone, 45 percent. Two weeks ago, a previous poll showed Boschwitz ahead 15 points.