Democrat Barack Obama surged to a four-point lead over John Edwards in Iowa, with Hillary Clinton fading to third just hours before the first presidential nominating contest, according to a Reuters/C-SPAN/Zogby poll released on Thursday.

Obama and Edwards gained ground overnight in the tracking poll, and Clinton fell four points to third place - a finish that, if it held, would deal a dramatic setback to the one-time Democratic front-runner.

Obama was at 31 per cent among likely Democratic caucus-goers, Edwards at 27 per cent and Clinton 24 per cent. No other Democrat was in double digits. In the Republican race, Mike Huckabee expanded his lead to six points, 31 to 25 per cent, over former Massachusetts governor Mitt Romney, the one-time leader in Iowa who has attacked Huckabee for his record as Arkansas governor.

Former Tennessee senator Fred Thompson is in third place in the Republican race at 11 per cent and Arizona Senator John McCain slipped two points to 10 per cent. Texas Rep Ron Paul also registered 10 per cent.

“There is a clear Clinton fade,” pollster John Zogby said. “None of it has been dramatic, but it has been steady.” He said Clinton, a New York senator, was losing to Obama, an Illinois senator, among Democrats and self-described liberals. “Under any circumstance, a 31-27-24 spread is still very close,” he said of the margins for the top three Democratic contenders.  About 6 per cent of Republicans and 5 per cent of Democrats remain undecided.

The rolling poll of 905 likely Democratic caucus-goers and 914 likely Republican caucus-goers was taken Sunday through Wednesday and has a margin of error of 3.3 percentage points for each party. New Mexico Gov Bill Richardson was fourth with 7 per cent and Delaware Sen Joseph Biden was at 5 per cent. Connecticut Sen Chris Dodd was at 1 per cent and Ohio Rep Dennis Kucinich was under one per cent.