Defense Minister Amir Peretz told Channel Two television that he will step down from his post and demand the Finance Ministry portfolio after the Labor primaries in three weeks. He rejected the idea of resigning now because he feared doing so probably would force new general elections.

"I have made my decision," he said. "But I think if I decided from one day to the next to get up and flee the Defense Ministry, I would be doing something bad...for the security and the State of Israel."

The Defense Minister, who carved out a career as head of the powerful national Histadrut labor union, is running far behind contenders seeking the Labor party chairmanship. Most party leaders have said they will bolt the coalition with Prime Minister Ehud Olmert, following the lead of party secretary and Knesset Member Eitan Cabel, who announced his resignation from his position as Minister-Without-Portfolio in the Cabinet. 

Cabel quit immediately after the Winograd Committee issued a scathing interim report on the role of the Prime Minister, Defense Minister and former IDF Chief of Staff Dan Halutz in the war against Hizbullah last summer.

However, Defense Minister Peretz has claimed the media exaggerated the criticism and skipped over positive comments about him. "Today we are much more prepared on the northern front, without a doubt," he claimed.

Livni Denies Charges of Lying

Prime Minister Ehud Olmert faces another crisis within his own party following Foreign Minister Tzipi Livni's public announcement that he should quit because of severe criticism of him in the Winograd report. Aides to the Prime Minister have accused Livni of lying to the Winograd panel.

The Foreign Minister's office denied the charges, and she and Prime Minister Olmert are to talk things out in a critical meeting Sunday following the weekly Cabinet session.

"Winograd was a committee to search out the truth, and Foreign Minister Livni presented facts as they were known to her," her aides said.

Winograd was a committee to search out the truth, and Foreign Minister Livni presented facts as they were known to her.

Differences between her and the Prime Minister during the war surfaced last week. "Cooperation between the Prime Minister and the Foreign Minister is not a personal issue; it is a critical issue," she declared. "It is no secret that during the war there was no such cooperation, and the [Winograd] Committee determined that the responsibility for the absence of cooperation was with the Prime Minister."

Analysts consider Olmert's government too shaky for him to fire her, but aides to Foreign Minister Livni have indicated she will not rescind her advice that Prime Minister Olmert should quit. Prior to the Winograd report, he accused her of trying to undermine his authority, and he will try to find common ground to continue working with her when they meet Sunday.