Peres is facing stiff opposition in the party's November primary vote that will decide if he will continue to lead Labor into the general elections. The term of the current Knesset expires in November 2006, and many analysts expect the government to fall by early next year over the issues of the budget and destroying more Jewish communities in Judea and Samaria.



Peres said that the expulsion from Gaza and northern Samaria could not have taken place without the cooperation of the Labor party, which holds 21 seats, including two won by the Am Echad (One Nation) party. Polls have shown that Labor's strength would remain the same if elections were held today.



Critics of Peres said that Labor must demand that Prime Minister Ariel Sharon continue with the policy of dismantling Jewish communities and forcing the residents out of their homes. Labor Secretary General Eitan Cabel said, "Now that disengagement is done, it is time for us to start acting like an alternative."



Peres claimed that by remaining in the government, Labor can use its clout to make changes in the budget to fight poverty.



Mr. Sharon met with Shinui party leader Lapid Thursday in an attempt to woo the 15-member, militantly secular faction back into the coalition, but Lapid rejected the overture.



"We are in the opposition because of our values," which include legalizing civil marriages, demanding the inclusion of ultra-orthodox youth in the IDF draft and cutting budget benefits for yeshivas, Lapid said.



He added that his party will vote against the proposed 2006 budget, which must be passed by March 31 in order for the government to continue in office. Interior Minister Ophir Pines (Labor) said that Labor should not support the budget unless major changes are made in social reforms.



The proposed budget already projects a deficit at the limit the American government has set for Israel to continue to receive foreign aid. Adding to pressure on the budget are burgeoning costs to cover the expulsion and the impracticality of expecting Washington to defray some of the costs, in the light of American expenses due to the Katrina hurricane disaster.