Prime Minister Ariel Sharon quit his right-wing Likud party on Monday to form a centrist party to run for the next elections, in a move which is set to reshape the Israeli political landscape for years to come.
Sharon has formally asked President Moshe Katsav to dissolve parliament and order a national ballot, the first step towards an early general election.
The hawk-turned-pragmatist leader is due to announce his departure from the Likud party later in the day and set up a new party headed by himself.
Sharon's aides said the new party, expected to attract 12 to 14 Likud Knesset (Parliament) members, will be a "true centrist party, from every perspective: political, economic and social."
Katsav, once Sharon's ally in Likud, said after talks with Sharon that he would make the decision quickly after consultations with party leaders and lawmakers, adding that he believed the elections would be held soon.
According to Israeli law, the president has 21 days to decide on whether to dissolve the Knesset and call a snap election.
The general elections, originally scheduled for November, 2006, are widely expected to be advanced to early next year.
On Monday morning, Sharon asked Defense Minister Shaul Mofaz to join his new party, saying that if Mofaz joins, he will remain as defense minister if Sharon wins the elections.
Mofaz, who announced on Sunday that he would contend the Likud chairmanship if Sharon quits, has yet to give Sharon his answer.
Meanwhile, Sharon is also wooing Vice Premier Shimon Peres to join his new party.
Peres, a veteran peacemaker and Sharon's old coalition ally, was defeated by Amir Peretz in the Labor party leadership race. Labor, headed by Peretz, voted on Sunday to quit Sharon's coalition government.
Peres' aides have hinted that he would not leave Labor to join Sharon's new party.
Analysts said Sharon's bold gamble has finalized his transformation from hard-liner to moderate and boosted prospects of progress in peacemaking with the Palestinians.
Sharon, 77, who helped establish the center-right Likud party in 1973, has been battling against dissidents inside Likud over the Gaza pullout, which was completed in September.
"It's a tsunami," said Israel Radio political commentator Hannan Crystal.
"Sharon's move to reshape Israel's borders today also becomes a move to shape a new political map with him at the helm of a new centrist party," Crystal added.
The prime minister wants to seize the chance to defeat Labour, then pursue plans to end the conflict with the Palestinians without having to battle Likud hardliners, said Sharon's aides.
If Sharon had no intention of going beyond the pullout from the Gaza Strip, the aides said, he would have stayed in the Likud "and be on the safe side."
Israel's Haaretz newspaper also speculated on Sunday that in a third term, Sharon would seek to evacuate isolated Jewish settlements in the occupied West Bank while retaining major enclaves in a peace deal with the Palestinians.
"This is a real opportunity for a coalition headed by the peace camp, including former Likud members who understood that for 38 years they have deceived the nation and themselves," the left-wing Meretz-Yahad's leader Yossi Beilin told Israel Radio.
He called Sharon's resignation "a big victory for supporters of sharing the land (with the Palestinians)."
The peace camp has favored withdrawal from occupied Palestinian territories and the establishment of an independent Palestinian state alongside Israel.
But Likud hard-liners, who strongly oppose the Gaza pullout and vow to punish Sharon for the withdrawal, have downplayed the significance of Sharon's decision to leave the party.
Likud Knesset member Ayoub Kara said Sharon's departure would mark an improvement for Likud, which had "lost its way under Sharon's leadership."
Kara said he was confident that Likud would keep its power and influence in the government even without Sharon.
One poll published on Monday indicated that an alliance of Sharon's new party with the moderate Labor and leftist parties would command a comfortable majority in the 120-member parliament.
Palestinian negotiator Saeb Erekat compared Sharon's departure from the Likud to the eruption of a volcano.
"I've never seen anything of this significance," he said. "I hope that when the dust settles, we will have a partner in Israel to go to the end game, toward the end of conflict, toward a final agreement."
However, the Palestinian Front for the Liberation of Palestine (PFLP) said the political turbulence has showed that Israel's politics is a failure.
"Sharon's resignation shows the failure of Israel's repressive policies in subjugating the Palestinians," the group said in a statement to reporters.
"The resignation is a second shake for the political map in Israel after the earthquake of Israel's withdrawal from the Gaza Strip and dismantling the former settlements there," it added.
The group meanwhile called for more Palestinian unity in not responding to any pressure aimed at forcing the Palestinians to abandon any of their national interests.