NEW YORK (Reuters) – Embattled New York Governor  David Paterson said yesterday he was still running for office,  in the face of reports that President Barack Obama had asked  him to withdraw from the 2010 race for fear that he cannot  regroup from a series of political setbacks.

“I am running for office,” Paterson told reporters at a  Manhattan parade. “I’m not going to discuss confidential  conversations,” he said, adding that he planned to continue  focusing on matters related to the financial crisis.

The New York Times reported yesterday that the Obama  administration is worried Paterson’s unpopularity could drag  down New York’s Democratic members of Congress and the  Democratic-controlled state legislature in November 2010  elections.

Citing an administration official, the Times reported that  Obama’s request that Paterson step aside was put forward by his  political advisers, but approved by the president.

The newspaper quoted another administration official as  saying: “Is there concern about the situation in New York?  Absolutely.” That official said the concern had “been conveyed  to the governor.”

A “New York Democratic operative with direct knowledge of  the situation” also confirmed the request had been put forward,  the newspaper said, adding that the operative described  Paterson as being “resistant” to the idea.

All of the newspaper’s sources spoke on condition of  anonymity.

Paterson, who as lieutenant governor assumed leadership of  the state government last year after Governor Eliot Spitzer  stepped down in a sex scandal, has seen his approval rating in  polls plummet for months after a series of political setbacks.

The state Senate was gridlocked for nearly five weeks  during June and July as Republicans and Democrats fought for  control. The global financial crisis has hit New York hard, and  the state has struggled with budget shortfalls.

Obama’s unusual request that Paterson not seek to remain in  office — an especially sensitive one given that he is the  nation’s first black president and Paterson is one of only two  black US governors — was conveyed by US Representative  Gregory Meeks, who is close to the administration, the Times  said.

Meeks could not be reached for comment, the Times said.