Kadima party chair Tzipi Livni is to take the country into general election ‘without delay' after failing to form a coalition government.
She had been tasked with putting together a coalition following her success in Kadima party primaries and following Prime Minister Ehud Olmert's pledge to resign following corruption allegations.
After meeting Israeli President Shimon Peres on Sunday, Ms Livni said: ""I could have stood here today and presented a government. I was ready to pay a certain price... but I wasn't ready to mortgage the future of Israel".
Ms Livni had set other parties a Sunday deadline to join Kadima in government.
But the key Shas party turned her down, prompting her to say potential partners had made "economically and diplomatically illegitimate" demands.
Elections were originally scheduled for November 2010 but are now likely to take place in February or March.