Israeli Prime Minister Ariel Sharon agreed Thursday to hold early elections, possibly as soon as February, kicking off a political campaign certain to freeze all moves to restart Mideast peace talks.

After meeting Sharon Thursday morning, newly elected Labor Party leader Amir Peretz said they had discussed holding the ballot between late February and the end of March, instead of next November as scheduled. Sharon's government is in danger of collapsing because Peretz wants to pull Labor out of the ruling coalition.

Yosef Lapid, head of the opposition Shinui Party, said he and Sharon agreed on a March ballot.

"On the one hand, we want to shorten the process, but on the other, we have to give time to prepare for elections, and so we agreed they would be in March," Lapid told The Associated Press.

Sharon told the Yediot Ahronot newspaper that he had reached the conclusion it was best to have elections "as quickly as possible."

Israel's parliament is scheduled to hold a preliminary vote Monday on whether to dissolve the government, Sharon's spokesman Assaf Shariv said.

The Israeli election campaign, combined with Palestinian parliamentary elections scheduled for January, will stall efforts to build on the momentum for peace following Israel's pullout from the Gaza Strip in September.

Peretz, head of the second-largest party in Sharon's coalition, told a news conference that Sharon had agreed to choose an election date by Monday.

"I'm letting him choose a date in that period between the end of February and the end of March and whatever date he chooses is acceptable to me. The earlier the better," Peretz said.

Peretz was elected Labor leader last week on a platform that included pulling out of the government and forcing an early poll.

He defeated veteran Labor head Shimon Peres, who led the party into the coalition to support the Gaza pullout. The withdrawal plan had sparked a rebellion within Sharon's hardline Likud faction that threatened to bring down the government before the pullout.

Peretz's victory left Sharon with little choice.

"In the complex and complicated reality in which the country finds itself, I have no intention of standing at the head of a minority government for months on end," Sharon was quoted as saying in Yediot on Thursday.

Peretz is a union leader who opposes the Sharon government's staunchly free market policies. He wants early elections as part of his plan to return Labor to its socialist roots and reach out to downtrodden voters as an alternative to Likud.

Complicating the election landscape are challenges to Sharon from within Likud, primarily from former Prime Minister Benjamin Netanyahu. Some Sharon allies have been pushing the premier to quit his hardline party and form a new center party.

Shariv said he did not know when Sharon would decide whether to stay in Likud or bolt.