Israeli Prime Minister-designate Tzipi Livni, also ruling Kadima chairwoman, announced yesterday that she failed to form a coalition and called for early general elections.

Livni, also Israel's foreign minister, made the announcement at a press conference held at the president's residence in Jerusalem, where she arrived at 5 p.m. (1500 GMT) to meet with Israeli President Shimon Peres.

"I know that time will not contribute to advancing the coalition negotiations and that time can not create a solution, but rather only prolong the uncertainty, and that is the basis for my decision," Livni said.

"The public is sick of politicking. If I thought that time could bring a solution, I would have tried."

There are others who are willing to pay any price, "but I am not willing to sell the state and its citizens only to become the prime minister," Livni said, referring to reports suggesting that opposition leader and Likud Chairman Benjamin Netanyahu had vowed to comply with the ultra-Orthodox Shas Party's demands if he is elected prime minister.

On Friday, Shas, Israel's third largest party by number of parliamentary seats, announced that it would not join a Livni-led cabinet, citing differences over the future of Jerusalem in the peace talks with the Palestinians and its demand for increased welfare benefits.

Shas' announcement gave a strong blow to Livni's cabinet-making efforts and drastically crushed her hope to build a wide ruling coalition.

Following Shas' boycott, Livni might still manage to secure a parliamentary majority, although thinner, with some smaller parties, as talks with them seem bearing fruit.

Over the weekend, however, both United Torah Judaism and the Pensioners Party -- at least one of which was essential for such a government -- rejected the offers she had made them.

Meanwhile, opposition to the idea of a narrow government swelled, both within her own party and in Labor, the second largest party with which Kadima initialed a coalition agreement earlier this month.

Livni therefore called a meeting of her key advisors Saturday night. The participants concluded that to continue the negotiations would merely erode Livni's image and subject her to greater extortion, and that she was better off taking the initiative and portraying herself as a leader who refuses to give in to extortion.

Earlier on Sunday, Livni's last-minute decision to postpone the meeting with Peres until 5 p.m., set off speculation that coalition negotiations were still in the works.

According to reports, Knesset speaker Dalia Itzik had requested the delay in a last-ditch effort to salvage talks to form a new government.

EARLY GENERAL ELECTIONS POSSIBLE

Livni's Sunday announcement means that general elections will probably be held in February or March, said local daily Ha'aretz. The next parliamentary poll had been scheduled for 2010.

The most probable date for a national election is February 17, 2009, according to another local daily the Jerusalem Post.

During Sunday meeting, Livni told Peres that she had done everything she could to try to put together a coalition, but other parties said they prefer elections.

"If everyone agrees that elections are in order, then we must do it quickly," she was quoted by Ha'aretz as telling the president, urging Peres to take action to set a date for early general elections.

"The nation will choose its leaders," said Livni, adding that she was certain of her victory in a general vote.

On Saturday, Livni said that she was not afraid of general elections, and that was actively seeking them, as she prepared to inform Peres of her failure to form a new coalition.

"We'll go to elections as soon as possible. I'm not afraid of elections," Livni told Ha'aretz.

Peres lauded Livni's decision and her determination to stick to her principles in the process of attempting to put together a coalition, adding that he was surprised that Livni informed him of her decision to relinquish negotiations a week ahead of the time Peres had allotted her.

He said he intended to summon the various parties and to give her an answer regarding the elections within three days, adding that "elections are not tragedies, the only issues are the timing and the method."

The president was scheduled to hold consultation meetings with heads of the Knesset (parliament) factions on Sunday evening.

By law, after Livni failed in her cabinet-making task, Peres might assign the mission to a second and even a third lawmaker. If all the efforts go futile, the Knesset will automatically dissolve itself, and snap elections will be held within 90 days.

Should Israel go to early general elections, recent polls showed that Likud would become the biggest winner, while a latest survey also found that the three-year-old Kadima would possibly win with a wafer-thin edge over Likud.

The political turmoil in Israel casts a shadow over its peace talks with the Palestinians. Palestinian officials have been complaining that Israel's political uncertainty represents a major blockade along the already sluggish peace process.

Little tangible progress has been achieved since the Palestinian and Israeli leaders promised last November to reach a comprehensive peace deal within 2008, and an early general election might blow away any remaining hope for the two neighbors to realize that ambitious goal.

Palestinians expressed concern on Sunday that Livni's announcement could put the peace talks in limbo for months until the elections are held.

"Time is precious. The next few months will be wasted because of (Israeli) elections and the U.S. elections," warned Nabil Abu Rdeneh, an aide to Palestinian President Mahmoud Abbas.

A meeting between outgoing Israeli Prime Minister Ehud Olmert and Abbas, which had been scheduled for Monday, was postponed until further notice because of the Israeli political upheaval, said Rdeneh.

Till the next government is established, Olmert, who has been enveloped in a series of corruption and fraud scandals, will remain in power with his caretaker cabinet.