NEW YORK (CNN/Money) - Arthur Andersen's practice in the United Kingdom agreed to combine with rival Deloitte Touche Tohmatsu Wednesday, the latest member firm to defect from Andersen.

All partners and staff of Andersen's U.K. practice will join Deloitte. The partners of both firms have voted overwhelmingly in favor of the transaction although the deal still needs regulatory approval, Andersen said in a statement.

Andersen U.K. had planned to merge with KPMG but KPMG called off the U.K. talks with Andersen over fear of litigation due to Enron Corp.-related lawsuits involving Andersen's U.S. practice, a source close to situation told CNN/Money. According to an Andersen spokeswoman, both firms mutually called off the negotiations earlier Wednesday.

"The decision to go with Deloitte in the U.K. is because it's culturally a good fit and the global merger with KPMG was off," the spokeswoman said.

Earlier this week, the lead plaintiff in the Enron shareholders' class-action lawsuit in the U.S. expanded the complaint to add several Wall Street firms. The amended complaint also attempted to extend Andersen's liability to cover Andersen Worldwide SC, the umbrella firm that controls Andersen and member firms in Brazil, the Cayman Islands, India, Puerto Rico and the United Kingdom.

KPMG International last week ended negotiations to merge its non-U.S.. operations with Andersen.

Andersen and Deloitte plan to complete the merger by July 1 and the new firm will operate under the name Deloitte & Touche.

Meanwhile, the Polish practice of Andersen also signed a memorandum of understanding to merge with Ernst & Young in that country. The combined firm will operate under the Ernst name and will have over 1200 employees. The deal is expected to be completed in a matter of weeks.

The latest defections come after David Duncan, the former Andersen auditor whose shredding of Enron Corp. documents led to his firm's criminal indictment, pled guilty to obstructing justice Tuesday and admitted that he directed the destruction to thwart a federal investigation.

Duncan, who has agreed to serve as a government witness, entered the guilty plea to a single felony charge in federal court in Houston Tuesday afternoon as part of a deal with prosecutors. The former Andersen auditor read a statement to the court in which he admitted to overseeing the shredding of Enron documents while knowing about an investigation by the Securities and Exchange Commission. Details

Wednesday's announcement also comes a day after leveraged buyout firm Fox Paine & Co. launched a bidding war for Arthur Andersen LLP's tax unit by signing a memorandum of intent to buy the entire practice.

The offer would include Andersen's 4,000 professional and support staff across the United States, the source said.

The bid from Fox Paine challenges an offer made by Deloitte & Touche last week. The Deloitte proposal calls for a significant number of Andersen's U.S. tax partners and tax professionals to join Deloitte. Details