Tel Aviv - Israeli Foreign Minister Tzipi Livni won a narrow victory in the leadership primary of Israel's ruling Kadima party, defeating her main rival, Transport Minister Shaul Mofaz, by only a handful of votes, results announced before dawn Thursday indicated.

Livni must now try and from a governing coalition to replace that headed by discredited premier Ehud Olmert, who announced in July he was quitting the party leadership and then the premiership, because of ongoing investigations against him for alleged corruption.

Livni won the contest with 43.1 per cent, compared to 42 per cent for Mofaz, a difference of only 431 votes.

But Mofaz's headquarters said the final difference between the candidates was only one vote, and his supporters are urging him to mount a legal challenge against the result, citing voting irregularities in several polling stations, the fact that voting was extended for 30 minutes on Wednesday, and because exit poll results were broadcast 15 minutes before polls closed.

Mofaz himself telephoned Livni early Thursday morning to congratulate her on her victory, Israel Radio reported.

The other two candidates in the race, Interior Minister Meir Sheetrit and Public Security Minister Avi Dichter, won 8.5 per cent of the vote and 6 per cent respectively.

A relieved Livni told supporters outside her Tel Aviv home at sunrise that she planned to set up a coalition as soon as possible, to deal with the challenges facing Israel and to ensure government stability.

"The national mission is to bring about stability quickly. This is not only my responsibility but the responsibility also of my colleagues in Kadima," she said in a muted victory speech.

The final result was much closer than predicted by television exit polls when voting closed after 12 and a half hours on Wednesday night. All three Israeli television channels had predicted Livni winning with 47 to 49 per cent of the vote, to around 37 for Mofaz.

But throughout the night the official results, as they trickled in, steadily ate at Livni's projected lead, ensuring a tense, drama-filled night for the two main candidates.

The Kadima primary is considered one of the most crucial in Israel's history, with party members determining who might well become the country's next prime minister.

The primary could also be decisive for the peace process with the Palestinians, with Livni, Israel's chief negotiator and - although a centrist - a staunch advocate of a two-state solution to the Middle East conflict, likely to continue negotiations according to their current format.

Mofaz, by contrast, is a comparative hawk in the centrist party, who has openly and repeatedly said he opposes dividing Jerusalem and wants to postpone negotiations on a final peace deal.

Livni, if she succeeds in forming a government, will become the second female prime minister in Israel's history, after Gold Meir, who was premier from 1969 to 1974.

But the chances the 50-year-old mother of two will form a government are far from assured, as potential coalition partners jockeyed for advantage ahead of the expected negotiations.

Voices in the Labour Party, Kadima's current main coalition partner, have been saying the party should rather press for early elections, even though polls show Labour heading for its worst-ever election defeat.

And Eli Yishai, leader of the ultra-Orthodox Shas party, another crucial coalition component, said he would not join a Livni-led government unless she accepted his party's two main demands - to increase child welfare benefits, and to take Jerusalem off the agenda in negotiations with the Palestinians.

Kadima currently holds 29 seats in the 120-seat Knesset. (dpa)