srael may have a new prime minister within weeks.
Scandal-hit PM Ehud Olmert is due to step down after his Kadima party elected a new leader, Foreign Minister Tzipi Livni, and a general election is possible in the coming months.
BBC News looks at the political process, likely scenarios, and the potential new leaders.
Why is Mr Olmert stepping down as prime minister?
He has faced growing pressure over multiple corruption investigations during his less than three years in office. In July he announced he would step down after leadership elections within his centrist Kadima Party on 17 September.
Police have recommended that he be indicted over two of the probes - allegations that he misused cash payments from a US businessman, and accusations that he double-billed government agencies for trips abroad. He had previously said he would resign if formally indicted.
How did Kadima choose its new leader?
On 17 September, just over half of about 70,000 registered Kadima members voted for a new leader. Ms Livni beat her main rival, Shaul Mofaz, by a mere 431 votes - 43.1% to 42%.
So will she become prime minister?
Not necessarily. According to the president's office, Ms Livni will have up to 42 days to attempt to form a coalition representing at least 61 of the Knesset's 120 seats from Israel's mosaic of political parties.
If she fails, the president may give another member of the Knesset up to 42 days to try to form a government. If still no government is formed, the president may mandate yet another member to try, or call elections, which must then take place within 90 days.
Mr Olmert is likely to remain caretaker prime minister throughout the process, which means he could remain Israel's leader for several weeks, or even months, after he formally resigns as prime minister.
Who were the leading Kadima contenders?
The race boiled down to a battle between Foreign Minister Tzipi Livni and Shaul Mofaz, currently transport minister.
KEY DATES
Feb 2001: Ariel Sharon elected prime minister
Aug-Sept 2005: Withdrawal from Gaza and four West Bank settlements, Binyamin Netanyahu resigns as finance minister
Nov 2005: Sharon resigns from Likud and forms Kadima
Dec 2005: Binyamin Netanyahu elected Likud leader
Jan 2006: Sharon suffers major stroke, Ehud Olmert becomes caretaker PM
March 2006: Kadima wins elections and later forms coalition with Labour
July 2006: Israel-Lebanon war breaks out
May 2007: Report criticises Olmert's handling of war. Calls for resignation.
July 2008: Facing corruption probe, Olmert announces plans to step down
September 2008: Tzipi Livni elected to lead Kadima
The contest was characterised as "Mr Security vs Mrs Clean", pitching Mr Mofaz's experience in the military establishment and hawkish language against Ms Livni's corruption-free reputation and deep involvement in negotiations with the Palestinians.
Internal Security Minister Avi Dichter and Interior Minister Meir Sheetrit also stood.
How likely are elections?
Most analysts say they are very likely within the coming months, although the timings are uncertain. The current coalition is a fractious one and it is not clear it would hold together under Ms Livni. Binyamin Netanyahu, the leader of the main opposition party Likud, has called for elections - and would benefit from them as polls show his centre-right Likud party set for major gains.
What are Ms Livni's coalition options?
Views vary. A crucial issue is whether she does a deal with the religious party Shas, often a kingmaker in Israeli politics. She has already said she does not intend to give in to its demand for child benefit increases in exchange for the party's support.
She could form a government without Shas, by drawing in the left-wing party Meretz, but it would be reliant on Israeli-Arab parties and therefore considered weak.
Either way, she is still reliant on the third largest party in the Knesset, Labour - but with its leader Ehud Barak polling badly, Labour is expected to be keen to avoid elections.
Who would be the key players in a general election?
The new leader of Kadima and Mr Netanyahu. When Mr Olmert announced he would step down, most polls showed Mr Netanyahu comfortably ahead of even Ms Livni. She has since narrowed the gap, but the veteran politician's image as a strong leader unwilling to compromise on security strikes a chord with a large sector of the Israeli population.
Mr Barak would also be a contender, but unless his ratings improve he is likely to be influential as a player in wrangling over the formation of a government, rather than a serious prospect for the premiership.
What do Kadima and Likud stand for?
Kadima initially stood for the unilateral disengagement agenda of former Prime Minister Ariel Sharon, who formed the party after many of members of his Likud party refused to support his policy of withdrawing troops and settlers from the Gaza Strip and parts of the West Bank.
That agenda has lost its popularity. Mr Sharon is in a coma after suffering a massive stroke, the militant group Hamas now controls Gaza in the wake of the withdrawal, and Mr Olmert - Mr Sharon's successor - has been widely criticised for his handling of the 2006 Israel-Hezbollah war in south Lebanon, the other area Israel has withdrawn troops from.
The party remains committed to US-sponsored peace talks. Tzipi Livni is deeply involved in the negotiations, although details of their content has not been made public.
Mr Netanyahu stands to the right of Ms Livni. He was opposed to the Gaza disengagement, and stresses a plan for economic development for the Palestinian Authority before he would undertake any serious negotiations.
What if Mr Olmert is indicted before a new government is established?
Technically, he would not have to resign unless he was charged - and then only if the offence was considered to involve "moral turpitude".
In fact, the only way he could resign from a caretaker role is by declaring himself unable to discharge his duties. If he did this, the deputy prime minister - currently Ms Livni - would take over. There have also been suggestions that another figure, Vice Prime Minister Haim Ramon, could be nominated to the caretaker role while Ms Livni tries to form a government.
What is the likely impact on the peace process?
The US has set a target of a peace deal by the end of US President George W Bush's term in January 2009. But with Mr Olmert on his way out, many say his government lacks the authority to negotiate and few are hopeful the year-end goal will be reached.
Mr Olmert is said to be pushing for a "shelf" or "interim" agreement before he leaves office, but Ms Livni is thought to be opposed to this and has warned against rushing an accord.
The Palestinian negotiators say they want a full deal or nothing. It is not clear whether a mechanism for continuing the talks under a new US administration has been discussed.
Palestinian Authority President Mahmoud Abbas is also in a weak position. Gaza is controlled by the rival Palestinian faction and militant group Hamas. Hamas say PA presidential elections are due in January 2009, but Mr Abbas does not want polls until 2010.
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