After a long and highly publicised police investigation, Israel's Attorney General Menahem Mazuz announced Wednesday night that he was planning to indict Prime Minister Ehud Olmert on corruption charges.

Mr Mazuz said that his final decision would be made pending a hearing for Mr Olmert and his lawyers, during which he will give the beleaguered prime minister an opportunity to present his defence. Such a hearing is typically offered to government officials prior to their indictment.

The case refers to suspicions that Mr Olmert allegedly double-billed charities and a government ministry for the same flights overseas, sent them false receipts and used excess reimbursements to pay for personal family travel.

According to a Justice Ministry statement, Mr Mazuz is considering charging Mr Olmert with fraud, breach of trust, false registration of corporate documents and tax evasion.

Mr Olmert has said that he will step down if indicted but, having resigned in September, legal sources said on Wednesday night that the process may take months and that Mr Mazuz may not make his decision until after the elections.

Mr Olmert returned this week from a low-key farewell at the Oval Office with US president George Bush. Mr Bush said the vision of a two-state solution for the Israeli-Palestinian conflict was still on the table thanks to Mr Olmert. "I just want you to know that I believe that vision is alive and needs to be worked on," Mr Bush added.

Both leaders agreed on the need to pass on to the next administration the progress already made in direct talks between Israeli and Palestinian leaders.

In a private conversation with congressman Robert Wexler (D-FL), Mr Olmert expressed his satisfaction with the signals the Obama transition team was sending on foreign policy and Middle East issues.

Briefing the Israeli press, Mr Olmert argued that most issues had been discussed and that "there is nothing to prevent us from reaching an agreement on the core issues in the near future".