Many see Foreign Minister Tzipi Livni's win in a party vote to succeed Prime Minister Ehud Olmert as a victory for Israelis who favor peace talks, but insiders played down the immediate prospect of bold moves.

Livni, who clinched the leadership of the Kadima party in a ballot on Wednesday, has made clear to confidants and advisers that she wants to concentrate on talks with the Palestinians, pursuing a goal she shares with U.S. Secretary of State Condoleezza Rice of reaching an agreement on statehood borders.

But like the Bush administration, which has just four months left in office, Livni is inclined to put Turkish-mediated peace talks with Syria on the back-burner, said several of those same sources, speaking on condition of anonymity.

Olmert has largely kept Livni in the dark about the indirect talks with Damascus, launched in May with scant input from the Foreign Ministry, fuelling her skepticism, the sources said.

"She does not think we can handle two fronts," one Livni confidant told Reuters, referring to Syria and the Palestinians.

But a former adviser cautioned that much depended on the next U.S. administration and added: "Once she sits in the prime minister's chair, she could change her position."

Livni's first order of business will be the challenge of uniting a fractious Kadima and piecing together a coalition government to head off an election showdown with right-wing Likud leader Benjamin Netanyahu, who leads in opinion polls.

The coalition-building process may take weeks, or months, and force Livni -- and her backers who are about to hand over power in Washington -- to scale back peacemaking ambitions.

Olmert intends to press ahead with the talks. He remains caretaker prime minister until Livni forms a new cabinet. Palestinian officials have made clear they want a fully comprehensive deal of a kind Olmert is unlikely to offer.

COALITION PRESSURES

Until then, Livni can ill-afford to alienate Jewish religious allies like the influential Shas, which oppose negotiations on hyper-sensitive issues like Jerusalem.

That means Livni will likely follow the path set by Olmert by deferring the most contentious issues, officials close to Livni say: "She, too, will have a coalition to preserve," one of the officials said.

Gidi Grinstein, head of the Reut Institute think-tank, said Livni faced a "difficult" choice: She can sacrifice some of her wider diplomatic and domestic goals to build a broader-based coalition or she can push forward with her plans, including a statehood deal, based on a narrower, less-stable coalition.

While officials say Livni is on the same page as Olmert on the extent of territorial concessions to the Palestinians, she takes a harder line on Palestinian refugees, opposing even a symbolic "right of return" for even a few thousand people.

"She has made it clear -- not one Palestinian will enter the state of Israel. It's a matter of principle for her," one former aide said of Livni, who fears setting a "precedent" that could erode Israel's identity as a Jewish state.

If Livni succeeds in forming a coalition, critics say she may have a hard time claiming a mandate for a sweeping compromise with the Palestinians -- she won Kadima's leadership with less than 20,000 votes, half of one percent of Israel's population.

"This was a victory in overtime. She has to prove she has a mandate," said Ranan Gissin, an aide to former Prime Minister Ariel Sharon, who quit Likud to found Kadima in 2005.

Grinstein, who has advised Livni, countered that she has "full legitimacy to move forward", pointing to previous prime ministers who took risky diplomatic steps despite their narrow election victories.

Complicating matters further for Livni, she will likely be flanked in cabinet meetings by two competing former military chiefs -- Labour leader Ehud Barak on her left and Kadima's emboldened Shaul Mofaz, who lost Wednesday's contest by a mere 431 votes, to her right.

"The bottom line," one former aide said of Livni, "She will need to be cautious."