Tel Aviv  - Foreign Minister Tzipi Livni won a narrow victory Thursday in the leadership primary of Israel's ruling Kadima party, and said she hoped to build a coalition as soon as possible, but her chances of becoming the country's next premier were far from certain.

Livni will replace as Kadima leader discredited prime minister 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.

The 50-year-old mother of two, who in ten years has gone from being an unknown Tel Aviv attorney to within touching distance of the top job in Israeli politics, defeated her main rival, Transport Minister Shaul Mofaz, with 43.1 per cent of the vote compared to 42 per cent for Mofaz, according to official results announced early Thursday.

Only 431 votes separated the two candidates, while the other contestants in the race, Interior Minister Meir Sheetrit and Public Security Minister Avi Dichter won 15 per cent of the vote between them.

Turnout was 53.7 per cent of the 74,000 Kadima members eligible to vote.

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.

The West Bank administration of Palestinian President Mahmoud Abbas welcomed Livni's election.

"Livni was deeply involved in the peace process so we think she will continue peace-seeking with us," senior Abbas aide Saeb Erekat told reporters in Ramallah.

Livni, in a muted speech at sunrise shortly after the final results were announced, told her supporters that "beginning tomorrow (Friday) I will meet with members of the Knesset factions in order to create quickly a coalition that will be able to cope with those challenges ahead of us."

But other potential coalition partners were coy as to whether they would sit in a government with Kadima.

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 and Livni, once charged by President Shimon Peres with the task, has 42 days in which to form a government. If she is unable to, Peres can either pass the task on to another legislator, or new elections must be held within 90 days.

Commentators pointed out on Israel Radio Thursday morning that the narrowness of Livni's victory could further undermine her chances of forming a government, since claims could be made that 431 votes did not constitute enough of a mandate to lead the country.

Polls show the hawkish Likud party beating Kadima in any new general elections and Likud whip Gideon Sa'ar called for other factions to agree on a date for a new country-wide poll.

The final result of the contest 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 forecast 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 nibbled at Livni's projected lead, ensuring tense, drama- filled hours for the two main candidates.

As it appeared that Livni's lead was less than announced by the television stations, Mofaz's camp began hinting that they would issue a legal challenge against the result, as Livni's lead was too narrow to be unequivocal.

Mofaz aides also claimed voting irregularities, slammed a decision to extend Wednesday's voting by 30 minutes, and criticized the fact that television stations broadcast the exit poll results 15 minutes before voting formally ended.

But amid mounting speculation on Mofaz's next moves, his lawyer said later that to the best of his knowledge the defeated candidate would not appeal the results.

Mofaz himself telephoned Livni early Thursday morning to congratulate her.

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. (dpa)