Olmert says time running out for two-state solution

Outgoing Israeli Prime Minister Ehud Olmert said on Monday time was running out for a two-state solution to the Israeli-Palestinian conflict.

At an annual memorial ceremony for Yitzhak Rabin, the Israeli prime minister killed by an ultranationalist Jew in 1995, Olmert again advocated a peace deal under which Israel would withdraw from nearly all of the occupied West Bank.

"If God forbid, we procrastinate, we could lose support for a two-state solution," he said, referring to the creation of a Palestinian homeland alongside Israel, a concept at the foundation of U.S.-sponsored peace negotiations.

"The decision must be taken now, without hesitation, before ... the narrow window of opportunity to plant (that) solution in the consciousness of our people and the nations of the world vanishes in front of our eyes," Olmert said.

Olmert has said that failure to establish a Palestinian state could lead to pressure on Israel to agree to a binational state including the West Bank and Gaza Strip, in which a higher Arab birthrate would eventually ensure Jews became the minority.

Talks on Palestinian statehood resumed last November but have been dogged by continued Jewish settlement expansion by Olmert's government and differences over core issues such as the future of Jerusalem.

The United States has said there is little chance of meeting its target of reaching at least a framework agreement by the end of the year.

Olmert resigned in September in a corruption scandal but remains prime minister until a new government is in place following a parliamentary election scheduled for February 10.

Speaking later in parliament, Olmert said that any government elected will have to "tear away many pieces of the homeland" in the West Bank, Jerusalem and the Golan Heights.

Opposition leader Benjamin Netanyahu, who is critical of Olmert's peace moves, said in recent days if elected he would continue negotiating with the Palestinians but on different terms. He has spoken of the need to encourage Palestinian economic growth but remains vague on whether to cede land.

Netanyahu is neck-in-neck in pre-election opinion polls with Foreign Minister Tzipi Livni, Israel's chief negotiator with the Palestinians.