Jerusalem- In a move which could lead to the end of a long political career, Israeli Prime Minister Ehud Olmert authorized his Kadima party Wednesday afternoon to hold a primary to elect a new party leader.

"The prime minister instructed us to act quickly to set primaries in Kadima. The process has started running," senior Kadima official Tzahi Hanegbi said.

He said he did not expect the contest to be held before the July 17 cross examination of fundraiser Morris Talansky, who, in dramatic pre-trail testimony on March 27, claimed Olmert had accepted hundreds of thousands of dollars in cash over a 15-year-period.

Olmert is suspected of illegally taking vast sums of money from Talansky, a Jewish fundraiser and businessman from Long Island in the US, in the years before he became premier in May 2006. The investigation is the latest of five probes the premier has faced

The premier has not been indicted and the investigation is still not complete, but Talansky was allowed to testify because the prosecution feared that as a a US national he would not return to Israel if and when a trial begins.

Talansky was not cross-examined by Olmert's lawyers during his testimony, but his statements were enough to prompt Defence Minister Ehud Barak, the leader of Olmert's main coalition partner, the Labour Party, to demand that the premier "detach" himself from the day-to- day running of the county in favour of a new Kadima leader.

If not, Barak said, Labour would support holding early elections.

Olmert initially rejected Barak's ultimatum, and insisted that his innocence would come to light after Talansky's testimony was challenged by his lawyers, but the news conference by the Labour Party leader sparked calls for new elections to be held.

Legislator Silvan Shalom, from the opposition Likud Party, has presented a bill calling for the Knesset to dissolve itself and for new elections to be held. The bill is slated to be voted on next week. However, Labour has said it will vote against if Olmert agrees to primaries, and the 19 Labour "nay" votes might be enough to see it defeated.

Polls show the Likud would beat both Labour and Kadima if elections were held now.

The front-runner to succeed Olmert as Kadima leader is Foreign Minister Tzipi Livni. However, Olmert is believed to be giving his support to another challenger, Transport Minister Shaul Mofaz.

Olmert, 63, first entered the Knesset in 1974, representing the Likud Party, and achieved cabinet rank in 1988. He was elected mayor of Jerusalem in 1993, but returned to national politics and to the cabinet 10 years later, when then-premier Ariel Sharon appointed him deputy prime minister and minister of trade and industry.

He followed Sharon when he broke away from the Likud and formed the Kadima party, and became party leader when Sharon had a massive haemorrhagic stroke in January 2006.

He led Kadima to victory in the elections a few months later. However, his popularity plummeted when Israel fought an inconclusive war with Lebanese Hezbollah guerrillas in July and August 2006. The calls for him to resign have intensified with each corruption probe. (dpa)