Israel’s Barak resigns to outflank rivals

"We must find every chance to reach in the near future a peace agreement with our neighbours," Barak told a snap news conference, adding the vote would be "a referendum for the path of peace".

Barak said he wanted to reconfirm his leadership role in efforts to end decades of Israeli-Palestinian conflict because Israel was in an emergency situation following 10 weeks of violence which has shattered peacemaking hopes.

At least 309 people, mainly Palestinians, have died in the violence.

"Israel needs special new elections so we have a new government with a renewed mandate and belief so we can stand before the challenges in front of us," Barak said.

In Washington, the White House said his announcement was an internal matter for the Israeli people, but the United States remained committed to ending the violence and bringing Israel and the Palestinians back to the negotiating table.

By deciding to quit now, Barak, 58, launched a pre-emptive strike against right-wing rival Benjamin Netanyahu, the former Prime minister who opinion polls showed could defeat him in a rematch of the 1999 general election.

Under Israeli law, only members of parliament can run for Prime minister in a special election. Netanyahu gave up his parliamentary seat and leadership of the main Opposition Likud party after Barak trounced him last year.

Netanyahu’s successor at Likud’s helm, Ariel Sharon, Israel’s leading hawk and Barak’s likely main challenger, will have a tougher time against Barak at the ballot box, according to opinion polls.

Sharon said he was surprised by Barak’s decision and pledged to win the vote.

Palestinian leaders said Barak’s decision was an internal Israeli matter but showed the Jewish state was in crisis as a result of stalled peace efforts.

Prospects for reconciliation have been dismal since the collapse of U S-mediated peace talks at Camp David in July and the subsequent start in late September of the Palestinian uprising against Israeli occupation in the West Bank and Gaza.

Senior Barak aide, Gilead Sher said a U S-led fact finding mission looking into the bloodshed would arrive in the region as early as Sunday night to start work on its inquiry.

Sher said he expected Barak would meet the head of the team, former senator George Mitchell, on Monday.

"We welcome the mission and we think it could contribute to calming the region and to calming the hostilities and to putting things back to normalcy," Sher told CNN.

Violence had ebbed early on Saturday following the killings of seven Palestinians and three Israelis on Friday in the worst bloodshed in weeks. But it resumed as dusk fell.

An Israeli was lightly wounded by bullets fired at a car in the West Bank, the Israeli Army said.

Palestinian gunmen also shot at an Army position near the West Bank town of Ramallah, at an Army vehicle near Kfar Darom Jewish settlement in Gaza and Ofer military base near the West Bank town of Bethlehem. Israeli troops returned fire.

Earlier, tens of thousands of Palestinians vowed revenge as they buried their dead in Jenin, Ramallah and a refugee camp near Bethlehem on the West Bank. An Jewish settler killed in a shooting ambush on Friday was also buried.

Fatah had joined Islamic and other Palestinian organisationsin calling for a "day of rage" on Friday and Saturday to commemorate a previous seven-year uprising which began in 1987.

A 12-year-old Palestinian boy died on Saturday from wounds sustained three days earlier after an Israeli sniper shot him in the head while he was playing in the town of Rafah, Palestinian hospital officials in Gaza said.

The Israeli Army said it had checked and found that none ofits troops fired in the area. "It wasn’t our fire, maybe they (Palestinians) shot him by mistake," a spokeswoman said.

His death raised the toll to at least 258 Palestinians killed in the uprising. Israeli police killed 13 Israeli Arabs in the early days of the uprising. Thirty-eight Israelis have also been killed.

Barak said he decided to resign after he realised that his recent calls for a national unity government with the Likud to tackle the Palestinian uprising had fallen on deaf ears.

He has been criticised for his handling of the Palestinian Intifada (uprising), which broke out in the vacuum left by the deadlock in peace talks.

Under Israeli law, parliament will not dissolve itself. Barak, leading a minority government, will remain as caretaker Prime minister until the elections take place.