Tuesday’s announcement by scandal-singed Rep. Vito Fossella (R-N.Y.) that he will not seek re- election is a rare bit of good news for beleaguered House Republicans.

House GOP leaders were dreading the idea of sticking by a weakened nominee in the most expensive media market in the nation, and they worried that they were too broke to compete effectively in a special election if Fossella had resigned.

Despite damaging revelations in the past three weeks that he had been arrested on drunken-driving charges and had fathered a daughter out of wedlock, the 43-year-old Congressman seemed determined to run for a seventh term, attending an important political dinner and Memorial Day parade back home in recent days. But Fossella changed course Tuesday, telling constituents in a letter posted on his House Web site that he needed to step aside for the good of his family and his community.

“This choice was an extremely difficult one, balanced between my dedication to service to our great nation and the need to concentrate on healing the wounds that I have caused to my wife and family,” he said.

Fossella’s decision to retire increases the likelihood that Republicans will hold his Staten Island-Brooklyn seat — the only one the GOP controls in all of New York City — in November.

Democrats have a 5-3 edge in voter enrollment and had been targeting the 13th district even before Fossella’s life started to unravel following his DWI arrest on May 1. But the district is conservative, and the seat has been held by Republicans since 1981.

“This Staten Island and Brooklyn district will vote true to its form in November and will send a Republican representative back to Congress who will fight for its needs,” National Republican Congressional Committee Chairman Tom Cole (Okla.) said in a statement.

But Fossella’s departure guarantees that Democrats will redouble their efforts to win the seat.

“The fact that this is an open seat makes for an even greater opportunity for Democrats,” said Carrie James, a spokeswoman for the Democratic Congressional Campaign Committee. “We’re confident that we’ll have a strong Democratic candidate whose values are in line with the district.”

But now that the political terrain in the district has shifted so suddenly, both parties face a period of confusing and potentially divisive jockeying, as they sort out who will be their strongest nominees. Both parties seem to have solid candidates waiting in the wings, but broader political considerations may determine who runs and who remains on the sidelines.

“The phones are burning up,” said former Rep. Guy Molinari (R-N.Y.), who held the seat Fossella now occupies in the 1980s, and remains a power in Staten Island politics.

The Staten Island GOP, which was planning to begin its endorsement process tonight, has postponed its candidate interviews until Monday.

For the Republicans, the list of possible replacement candidates for Fossella is headed by Staten Island District Attorney Daniel Donovan Jr. and state Sen. Andrew Lanza.

House GOP leaders have already reached out to Donovan, who issued a statement Tuesday saying he would decide what to do very soon.

“Over the course of the next few days, I will carefully weigh and consider all of my options,” Donovan said. “I will be guided in my decision by what I believe to be in the best interests of the people of Staten Island. Currently, I am entrusted with the responsibility of serving as the district attorney of Staten Island. This is a trust I do not take lightly, especially in light of the fact that as recently as six months ago, 68 percent of the residents of Staten Island re-elected me to continue to serve in that capacity.”

But there could be a disadvantage for Republicans if Donovan runs and wins. If he’s elected to Congress, Democratic Gov. David Paterson would get to appoint his successor as D.A. — and that matters to Staten Island GOPers, because Donovan is the first Republican to hold that post.

Similarly, Lanza, a close friend of Fossella’s, would have to give up his seat to run for Congress. With Democrats poised to seize control of the state Senate in November for the first time in more than four decades, state GOP leaders are urging their Senators in even remotely competitive districts to stay put.

Lanza did not respond to a telephone message left at his Albany office Tuesday. He is scheduled to host a fundraiser for his state Senate committee Thursday evening in Manhattan.

While Donovan and Lanza deliberate, GOP sources said that James Simpson, a wealthy transportation executive who has headed the Federal Transit Administration since mid-2006, is interested in running. Simpson did not respond to a message left at his Washington, D.C., office Tuesday.

The Staten Island Advance reported late Tuesday that Staten Island County Clerk Stephen Fiala (R) and Jamshad Wyne, the president and CEO of Staten Island Heart Imaging PC and the Staten Island GOP’s finance chairman, are also eyeing the race.

Other Republicans could emerge if Donovan and Simpson do not run.

Democrats face similar dilemmas.

New York City Councilman Domenic Recchia and lawyer Stephen Harrison, the 2006 nominee, have been competing for the Democratic nomination. But while the DCCC has been high on Recchia, both Recchia and Harrison hail from Brooklyn, where only 20 percent of the district’s voters live, and with Fossella out of the picture, Staten Island Democrats may attempt to nominate one of their own.

But the three top Democratic elected officials in Staten Island — state Sen. Diane Savino, state Assemblyman Michael Cusick and City Councilman Michael McMahon — have been hesitant to run for Congress in the past. Both Cusick and Savino would have to give up their seats to run for Congress, and most Democrats believe Savino, the state Senate’s third-ranking Democrat, is content to stay put for now.

Cusick and McMahon have expressed interest in a Congressional bid in the past few days, but none has made the leap yet. Complicating McMahon’s ambition is the fact that his wife is running for a state Supreme Court seat this year.

“Nobody seems to have made up their mind yet, so it’s all up in the air,” said Chris Bauer, executive director of the Staten Island Democratic Party.

A McMahon or Cusick candidacy could put Staten Island Democrats at odds with their Brooklyn counterparts, who favor Recchia. Although the vast majority of the 13th district is in Staten Island, the Brooklyn Democratic organization is the biggest in the United States, making the county chairman, Vito Lopez — who doubles as a state assemblyman — a huge political power who New York Democrats do not like to cross.

Lopez did not respond to messages left in his Brooklyn and Albany offices Tuesday. But a Democrat familiar with some of the deliberations said that Lopez, Staten Island Democratic Chairman John Gulino, Cusick, McMahon, Recchia and Harrison “are all talking to each other.”