Foreign Minister Tzipi Livni and Transport Minister Shaul Mofaz are neck-to-neck in the race to succeed Ehud Olmert as leader of Kadima and Prime Minister of Israel after his dramatic announcement that he would not be running in the Kadima primaries next month.
In a televised address on Wednesday night, Mr Olmert attacked his detractors and insisted once again that he was innocent of the corruption claims being investigated by the police.
"I have full and satisfactory answers," he said. "But I will not hold this discussion in the media or in press conferences, but in a fair and measured fight."
Mr Olmert announced that he would not be running in the Kadima primaries on September 17 and promised not to influence them in any way.
"When a new chairman is chosen for the party," he said, "I will resign from my post as prime minister to allow the new chairman to form another government quickly and efficiently."
The announcement came as a surprise. For the past three months, since details of the investigation into allegations of bribe-taking from US fundraiser Morris Talansky came to light, Mr Olmert insisted that he would resign only if indicted. Sources close to him were unaware of his plans until two hours before he went on air.
He reached the decision with his wife and children, though some of his confidantes have been advising him to choose his own date of departure to fight his legal battles without having to run the country.
Recent revelations in the six separate investigations into his financial affairs and the failure of his lawyers to demolish the preliminary testimony of Mr Talansky had led to the conclusion that an indictment was simply a matter of time.
Over the past few days Mr Olmert had expressed growing frustration at the breakdown of discipline in his ruling coalition, with members of all parties voting against the coalition line in the Knesset.
He apparently also found it impossible to work with Ms Livni as she stepped up her campaign to replace him.
This week she unveiled her campaign team, which included some of former Prime Minister Ariel Sharon's closest advisers.
For the past few months she has been seen as the clear front-runner in a possible Kadima leadership primary. But according to a poll published last Friday in Yediot Ahronot, Mr Mofaz was rapidly closing the gap.
The poll put Ms Livni on 38 per cent, just short of the 40 per cent needed to secure the nomination in the first round. Mr Mofaz was at 33 per cent and of the other two candidates, Internal Security Minister Avi Dichter was on 13 per cent and Interior Minister Meir Sheetrit eight per cent.
Party insiders believe that the gap between the two leading candidates could be even smaller as Mr Mofaz has been more active over the past few months, building up a campaign infrastructure and closing deals with local party bosses and union leaders.
By Israeli law, once Mr Olmert resigns, the new Kadima leader will have four weeks to form a coalition that will support him or her as prime minister. Failing that, the candidate will receive an extension of two weeks and if a new government is not sworn in, Israel will hold elections in 90 days.