By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Senator Lisa
Murkowski dropped out of the Republican Senate primary in
Alaska Tuesday, conceding to a Tea Party-backed insurgent in
a stunning upset fueled by conservative supporters.

Joe Miller, a Fairbanks attorney who was heavily backed by
former Alaska governor and potential 2012 presidential
contender Sarah Palin, had a thin lead over Murkowski as the
last ballots from the August 24 primary election were counted.

"Based on where we are right now, I don't see a scenario
where the primary will turn out in my favor," Murkowski told
supporters as she conceded defeat at her campaign headquarters
in Anchorage.

Murkowski becomes the seventh member of Congress, and the
third senator, ousted amid anti-incumbent fervor fanned largely
by a weak economy and the conservative Tea Party movement.

In an election year marked by voter anger over lost jobs
and spiraling deficits, Republicans hope to take back control
of Congress in the Nov. 2 midterm elections, when 435 seats are
up for grabs in the House and 37 seats in the Senate.

Murkowski joins three-term Republican Senator Robert
Bennett of Utah, who lost his renomination bid at a state party
convention in May, and five-term Senator Arlen Specter, who
lost the Democratic primary in Pennsylvania. [ID:nN26196925]

Tea Party-supported candidates have won primary victories
in Florida, Nevada, Colorado and Utah.

Miller thanked the conservatives who backed him, including
Palin, Mike Huckabee and "the national Tea Party movement."

"Now is the time for all Alaskans to come together and
reach out with our core message of taking power from the
federal government and bringing it back home to the people,":
he said in a statement.

"On to November!" a triumphant Palin said on Twitter,
congratulating Miller and thanking Murkowski for her service.

Palin's endorsement of Miller was credited with inspiring
the California-based Tea Party Express to pour about $600,000
into his campaign, money that was used in a late-campaign
advertising blitz.

Murkowski, the most senior Republican on the Senate Energy
Committee, has been considered a moderate on several issues and
a potential compromise vote on national climate legislation.

Miller is on record as denying that human-caused emissions
are responsible for climate change.

Murkowski is also the scion of a prominent Alaska family.
Her father, Frank Murkowski, served for 22 years in the Senate
before being elected governor in 2002. One of his first actions
as governor was to appoint his daughter, then a state
legislator, to fill the Senate seat he had just vacated.

Palin ousted the elder Murkowski from office when she
soundly defeated him in the 2006 GOP gubernatorial primary.
(Writing by Joanne Allen, editing by Anthony Boadle)