Labor pulls out of Sharon government

Prime minister poised to bolt Likud

Israeli Prime Minister Ariel Sharon reportedly is forming a new party.

• Sharon agrees to early Israel vote

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JERUSALEM (CNN) -- Israel's Labor Party voted Sunday to withdraw from Prime Minister Ariel Sharon's ruling coalition, a move that is expected to force the dissolution of Israel's parliament and leave Sharon poised to leave the right-wing Likud party to form a more moderate political organization.

Sharon's political advisers told CNN that the prime minister would announce his moves on Monday.

If Sharon forms a new party, it would be an odd move for the longtime hawk who, at 77, has become something of a political pragmatist.

He could be joined by high-profile political figures on the left and the right, including the current finance minister, Ehud Olmert, and former Labor leader Shimon Peres, a longtime political foe but a personal friend.

For the past year, Sharon has faced rebellion inside the Likud, a party he helped found in the 1970s, over his decision to pull Israeli soldiers and settlers from Gaza and parts of the West Bank, Palestinian territories Israel has held since 1967.

Now Labor, which had been Sharon's main partner in his ruling coalition in the Knesset, Israel's parliament, has voted to quit the coalition.

'Tantamount to a huge political earthquake'

Martin Indyk, who served as U.S. ambassador to Israel during the Clinton administration, said Sharon's expected decision was "unprecedented in Israeli history and tantamount to a huge political earthquake."

"In what presumably would be his last term in office, he intends to make big strides which he cannot do hobbled by a right-wing party, and therefore his calculation is that he can, through this big bang, create a large center bloc that would give him the basis for making some political decisions vis-a-vis the Palestinians," Indyk told CNN.

Elections would likely be held next March, and the vote is expected to pit Sharon as a centrist against Likud hardliners such as Benjamin Netanyahu and against Labor members angry over his economic austerity measures.

Netanyahu, who served as prime minister in the late 1990s, quit as Sharon's finance minister because of his opposition to the territorial concessions in Gaza.

Peres was ousted as Labor leader last week by Amir Peretz, a self-described socialist known for his fiery rhetoric and class-warfare style. Peretz has called on Likud members to switch to Labor.

Sunday's vote was considered a formality, as both major parties have declared they are in favor of March elections. The Knesset is due to vote on an election date Wednesday.

CNN Correspondent Guy Raz contributed to this report.

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