Israeli Prime Minister Ehud Olmert has decided to step down in the face of probes into his alleged corruption scandals, prompting right-wing Likud Party leader Benjamin Netanyahu to call for new elections.

A snap parliamentary election in Israel could paralyze the Middle East peace talks because Netanyahu, who recent opinion polls suggest would win it, is a leading critic of Olmert's peace moves with the Palestinians and Syrians.

Dogged by corruption scandals, Olmert announced on Wednesday that he would bow out of his centrist Kadima Party's Sept 17 leadership contest and then step down as prime minister.

It may take his successor months to cobble together a new coalition, meaning Olmert could remain in power as interim prime minister, possibly until next year.

"This government has reached an end and it doesn't matter who heads Kadima. They are all partners in this government's total failure," Netanyahu told Israeli Radio.

"National responsibility requires a return to the people and new elections."

Netanyahu was not alone in predicting new elections that could throw Israeli politics into turmoil for months.

Vice-Premier Haim Ramon, a Kadima leader and Olmert’s confidant, said he believed new elections were a "high" probability because Olmert's successor would find it difficult to form a new government.

One day after Olmert's announcement, Israel's largest-circulated newspaper, Yedioth Ahronoth, featured the prime minister's back on the cover under the banner headline, “The Right Step.” Maariv declared: "Olmert's Era, the End."

Netanyahu could try to shortcut Kadima's plans to form the next Israeli government by mustering a majority in parliament, either to form his own coalition or to move up elections, originally scheduled for 2010.

The US said its goal of getting Olmert and Palestinian President Mahmoud Abbas to reach a peace deal this year was unchanged.

Olmert has vowed not to "ease up" on peacemaking until his last day in office, but analysts doubt whether he will have the political strength to make commitments, either in final-status talks with Abbas or in direct negotiations with Syria.

Four Kadima ministers, including Foreign Minister Tzipi Livni and Transport Minister Shaul Mofaz, have started campaigns to replace Olmert in the Sept 17 vote. And polls saw Livni, Israel's chief negotiator with the Palestinians, ahead within Kadima.

Olmert has faced weeks of public pressure to resign over probes into suspicions that he took bribes from a US businessman. But he has denied any wrongdoing, and vowed on Wednesday to prove his innocence.

Olmert's successor as Kadima leader would not automatically take over as prime minister. Under Israeli law the current government would be dissolved and the new leader has to form a new coalition before taking over.

Defense Minister Ehud Barak, head of the left-of-center Labor Party and Olmert's largest coalition partner, said he believed Kadima could form a new government without going to elections as called for by Netanyahu.

Barak's Labor lags behind Likud in the opinion polls.

US President George W. Bush has phoned Olmert to extend his warm wishes.

A White House spokesman said Bush talked with the Israeli leader on Wednesday just before Olmert announced his resignation.

Spokesman Gordon Johndroe said Bush has appreciated Olmert's friendship, leadership and work for peace.

Questions:

1. Who is expected to win Israel’s parliamentary election after Ehud Olmert steps down?

2. When were Israel’s next elections scheduled to be held?

3. What corrupt move has Olmert been accused of in the past weeks?

Answers:

1. Benjamin Netanyahu.

2. 2010.

3. Accepting bribes from a US businessman.