Amram Mitzna, 58, an ex-general and former mayor of the port city of Haifa, said he was convinced his policies were the right ones, but intrigue and interference from other party leaders after the drubbing at the polls in January had proven too much. His resignation cut off a meteoric career in national politics just seven months after it began.

Party secretary Ofir Pines said he expected a new leader to be chosen by the end of July. Mitzna was a leading voice against Labour's rejoining the government of Ariel Sharon, and his resignation reopens the possibility that a more centrist leader might join forces with the hardline prime minister.

That would be seen as another blow to Israel's "peace camp," which championed the effort to reach peace with the Palestinians in exchange for land captured in 1967. The peace process, which set up Palestinian autonomy in parts of the West Bank and Gaza, collapsed in late 2000 amid violence that continues.

Mitzna took over the party in a November primary weeks after Labour bolted Sharon's coalition. His clean image, reputation for straight talk and newcomer status were seen as assets among Israelis who have grown cynical about politics.

He favoured an unconditional return to peace talks and promised to quickly erect a barrier between Israel and the West Bank and completely pull out from Gaza even if no deal were achieved - part of a "unilateral separation" from the Palestinians to keep suicide bombers out of Israel.

Although polls showed the separation idea was popular, the bespectacled, bearded ex-general with a reedy, tenor voice was perceived by many as too soft.

Sharon easily won the Jan. 28 elections. Labour dropped from 26 seats to 19 in the 120-seat parliament, while Sharon's Likud doubled its strength from 19 to 38 seats and easily formed a governing coalition without Labour.

"He operated at a time when it was difficult to raise Labour from the ashes," said Pines, alluding to the public's widespread despair of peace prospects after 31 months of deadly violence.

Mitzna said Sunday he was convinced Labour's land-for-peace agenda ultimately would prevail, and that Israel should end Jewish settlement in the West Bank and Gaza, and "must separate from the Palestinians and from so many illusions."

One possible replacement is the man Mitzna replaced, ex-general Binyamin Ben-Eliezer, who served as defence minister in Sharon's first government and who has suggested he would be willing to join Sharon again. Another is Matan Vilnai, also an ex-general, who holds more hardline views on the Palestinians than Mitzna.

Ex-finance minister Avraham Shochat also suggested Sunday he might run.

The other possible candidates include elder statesman and former premier Shimon Peres, 79, and ex-premier Ehud Barak, who led the last round of peace talks and recently has adopted a hard line, saying his proposals exposed the Palestinians as not ready for peace.

World Fact Book (CIA)]