Tzipi Livni is to step down from the political frontline, she announced today.
The former Kadima leader handed in her resignation from the Knesset to Speaker Reuven Rivlin, following speculation in the Israeli media.
It is thought that Ms Livni will maintain a central role in Israeli politics, but do so from outside Israel's parliament.
A month ago she was defeated in the Kadima Party primary race by the former defence minister, Shaul Mofaz. She was a star of the party, founded by Ariel Sharon in 2005, in its early years but Mr Mofaz secured nearly two thirds of the vote in the internal leadership election.
Her exit from the Knesset comes amid expectation that Prime Minister Benjamin Netanyahu is planning to call early elections, to take place as soon as this September.
Ms Livni told reporters that Israel was too dear to her for her to retire from all politics. She used her resignation speech to warn that Israel was running out of time to resolve its issues. "Israel is on a volcano, the international clock is ticking, and the existence of a Jewish, democratic state is in mortal danger," she said.
"The real danger is a politics that buries its head in the sand."
She also said she had no regrets about her focus on reaching a deal with the Palestinians during her time as Opposition Leader. "Even if the Israeli-Palestinian conflict isn't in vogue right now, there's an urgent need to reach a permanent agreement with the Palestinians as well as with the Arab world."