The outgoing Prime Minister of Israel, Ehud Olmert, has publicly acknowledged for the first time that "almost all" of the territory seized during the Six-Day War in 1967 will have to be given back in return for peace with the Palestinians.

In an interview with Israel's biggest-selling newspaper, Yedhiot Ahronot, in which he underlined the urgent need for an agreement to be reached while the Palestinian President Mahmoud Abbas remains in office, Mr Olmert warned that the alternative was "the very great danger that there will be a bloody clash, which will thwart any possibility of continuing negotiations".

Declaring that "what I am saying ... has not been said by any Israeli leader before me", Mr Olmert also went further than any member of his government in laying down some of the minimum requirements he believes he, or his successor will need to fulfil if there is to be a deal with Mr Abbas.

The Prime Minister, who has already announced his resignation in the face of a police inquiry into fraud and corruption allegations, insisted he would continue working for an agreement for the weeks or, if his successor as leader of the ruling Kadima Party, Tzipi Livni, fails to form a workable coalition, months before he has to stand down.

For the first time, Mr Olmert also told an interviewer that a "similar percentage" of territory would have to be given to the Palestinians in return for the most populous Jewish settlement blocs in the West Bank which Israel aims to keep in any "final status" deal. He declared: "We face the need to decide but are not willing to tell ourselves. Yes, this is what we have to do."

He added: "In the end, we will have to withdraw from the lion's share of the territories and, for the territories we leave in our hands, we will have to give compensation in the form of territories within the State of Israel at a ratio that is more or less one to one."

An infuriated Knesset member in the right-wing Likud Yuval Steinitz, a former foreign and defence committee chairman, told Israeli Army Radio: "The Prime Minister's concession of the essential borders of defence is a gamble on the bone of existence and the future of the state of Israel".

But Mr Olmert's remarks also drew fire from the left. Yossi Beilin, the former leader of the doveish Mertez party, said: "Olmert has committed the unforgivable sin of revealing his true stance on Israel's national interest just when he has nothing left to lose."