[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/02/28/art.pawlenty.cpac.cnn.jpg caption="Gov. Tim Pawlenty is considered a possible 2012 contender."](CNN) - Minnesota Gov. Tim Pawlenty will announce Tuesday that he will not seek a third term as governor, sources tell CNN.
The decision to avoid a potentially difficult re-election bid next year will almost certainly be seen as the first step in a possible presidential run in 2012.
Pawlenty has scheduled a press conference at 3 pm ET today to reveal his future plans at the state capitol building in St. Paul, Minnesota.
The two-term Republican governor who has pressed the party to a better job of reaching out to what he calls "Sam's Club voters" was reported to be on John McCain's shortlist as a running mate in last year's election.
Pawlenty was first elected governor in 2002 and squeaked out a re-election victory in 2006, when Republicans across the country were hammered in the midterm elections.
Pawlenty has come under pressure lately to sign a certificate of election allowing Al Franken to take his seat in the U.S. Senate, if Minnesota's state supreme court rules in favor of Franken and against Republican Norm Coleman in the state's marathon Senate battle.
His approval ratings in the state have slipped in recent months, numbers that might have left him potentially vulnerable to a Democratic challenger if he ran again.
UPDATE: CNN's John King reports that two conservative activists in the Washington area who are close with Pawlenty and his team say the governor is actively thinking about 2012.
The sources said that by leaving after two terms, Pawlenty will be able to go out on top by closing a $4.6 billion budget gap without tax increases favored by the Minnesota Democratic Farmer Labor Party. Pawlenty did so using the line item veto and unalottment - something no other GOP Governor has done.
The sources also said that campaign finance laws in Minnesota are restrictive and would would make it difficult to operate on a national stage.