Israeli Prime Minister Ehud Olmert may resign early next week, his spokesman said.
"He will notify the cabinet on Sunday and then he will go to the president to give his formal letter of resignation," Mark Regev told Deutche Presse-Agentur dpa.
Regev clarified however that final coordination was needed between Olmert and President Shimon Peres as to the second part of the formal procedure - submission of the letter of resignation.
This could be Sunday, Monday or also after Peres returns from the annual UN General Assembly meeting in New York, he said.
Formal notification to the cabinet prior to a prime minister's resignation is a requirement under Israeli law, Regev explained.
Under the law, Olmert's resignation will take effect 48 hours after submission. The premier's resignation automatically means resignation of the cabinet, which then becomes a transitional government.
The president then has seven days to give the task of forming a new government to someone else - Tzipi Livni, the new leader of Israel's ruling party, who will have 42 days to do so. If she fails, new elections will be held within 90 days, or by March 2009, a year early.
Olmert, plagued by suspicions of corruption, announced his intention to resign in July. His Kadima party elected a new leader Wednesday, with Foreign Minister Tzipi Livni narrowly beating main rival Shaul Mofaz with a margin of 1.1 per cent.
Livni was set to begin consolidating her power in the faction by holding talks with her defeated rivals Friday and chairing her first caucus meeting in the Knesset (parliament).
However, Mofaz, who she defeated by just 431 votes, canceled his meeting with the new Kadima leader, after dramatically announcing Thursday night he was taking a timeout from politics.
"The time has come for me to take a break," Mofaz told his campaign headquarters in Givatayim, a suburb east of Tel Aviv, Thursday night.
"I want to consider my future and different ways that I can contribute to Israeli society, to the state and to my family. I am not requesting a position or rank in the government or the Knesset. I will remain a Kadima member and do everything in my power for the party."
The announcement stunned both his supporters and Livni, whose aides said they tried to reach Mofaz and persuade him to reconsider. Mofaz, however, declined to meet with Livni.
"I was surprised to say the least. All the activists were surprised. All the friends were surprised. All the closest people were surprised," Kadima legislator Ronit Tirosh, a close supporter of Mofaz, told Israel Radio Friday.
"He just closed himself inside with his family, wrote what he wrote, and in the evening he dropped the bomb," she said.
Mofaz, 60, a former army chief of staff and defence minister and a comparative hawk within the centrist party of Prime Minister Ehud Olmert, currently serves as transport minister. He is also in charge of "strategic dialogue with the US," meaning he is Israel's representative in talks coordinating responses to Iran's nuclear programme.
Government sources told Israel Radio Friday a replacement would have to be appointed to that crucial post. Because of his narrow loss, speculation had also been rife that Livni would give him a senior post such as the foreign ministry.
Livni was formally announced the winner of the Kadima primary Thursday, after official results showed her obtaining 41.3 per cent of the vote, against 40 per cent for Mofaz. The other two candidates, Interior Minister Meir Sheetrit and Public Security Minister Avi Dichter, won 8.5 and 6.5 per cent of the vote respectively.