Former immigration minister Robert Jenrick won the second round of voting in the contest to replace Rishi Sunak, but Ms Badenoch picked up the most votes, narrowing the gap slightly. She also saw off a challenge from ex-home secretary James Cleverly, keeping him in third.
Seen as the early favourite, Ms Badenoch appeared to stumble last week when she came second in the first round of voting. But she gained some ground on Mr Jenrick in the latest round, picking up six votes, the most of any contestant, to his five.
The results of the second ballot saw Mr Jenrick receive the backing of 33 MPs, Ms Badenoch 28, Mr Cleverly 21, Tom Tugendhat 21 and Mr Stride 16. As the MP with the lowest number of votes, Mr Stride automatically leaves the race.
The remaining four contenders will now proceed to the upcoming Conservative Party conference, which will be dominated by the contest. All four will give a speech during the week-long event in Birmingham.
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