Jerusalem - The Israeli Labour Party, Premier Ehud Olmert's main coalition partner, decided Wednesday not to support a bill calling for the dissolution of the Knesset, thus defusing a crisis which threatened to end the current government's term of office.

Israel Radio reported Wednesday morning that Labour's about-face came after Prime Minister Ehud Olmert agreed late Tuesday night to a Labour demand to set a date for his Kadima party to hold primaries to choose a new leader.

The Knesset dissolution bill, which would pave the way for new elections, is unlikely to pass without the support of the 19-seat Labour faction, and its sponsors could now decide to withdraw it.

Olmert had threatened to fire any minister who supported the bill, but the Labour Party leader, Defence Minister Ehud Barak, had refused to withdraw his support for the motion.

But the agreement late Tuesday night, between Labour Party Secretary-General Eitan Cabal and senior Kadima legislator Tzahi Hanegbi, appears to have defused the crisis.

Under the agreement, Kadima promises to convene a committee Wednesday to set in motion primaries for choosing a new leader.

On Monday next week, the Kadima faction will discuss the results, and 10 days later the Kadima council will convene to determine an exact date for primary elections, to be held before September 25.

Barak precipitated the current crisis on May 28, when he demanded that Olmert remove himself from the day-to-day running of the country, arguing that a prime minister under investigation for alleged corruption could not give his full attention to the many problems facing the country.

Olmert is suspected of taking hundreds of thousands of dollars in cash form an American businessman. He has not yet been indicted and the investigation is continuing.

Barak demanded that Olmert's Kadima party appoint a new leader, or else he would work for early elections.

Olmert refused refused to step down. He did, under pressure, authorise leadership primaries, but no date had been set for them. (dpa)