A new party would allow Sharon, Israel's most popular politician, to sidestep Likud rebels who opposed his Gaza Strip withdrawal and object to further concessions to Palestinians. It could also improve Sharon's political maneuverability by opening new options for coalition partners.
"All signs suggest he will bolt," Hanan Crystal, a political commentator, said Saturday.
Israel Radio reported that Sharon's aides have completed technical preparations for the possible registration of a new party. The prime minister was expected to make his decision this weekend, and possibly announce his plans on Monday at a weekly meeting of Likud legislators, the report said.
Polls show a new Sharon-led party could marshal enough electoral strength to put together a new government.
The pressure on Sharon to declare his intentions intensified last week after the union leader Amir Peretz took control of the Labor Party in an unexpected victory against Shimon Peres and immediately demanded that scheduled November 2006 elections be moved up.
Labor joined Sharon's coalition last year to assure passage of the Gaza pullout. With the evacuation over and Labor stripped of its peace platform by Sharon's unilateral pullout, Peretz wants to shift Israel's political debate from the conflict with the Palestinians to social spending and workers' rights.
Sharon, who had hoped to keep his coalition intact until November, bowed on Thursday to the twin pressure from Likud rebels and from Peretz, and agreed to call a vote by the end of March.
Now he has to decide on what list to run.
Sharon is expected to settle on an election date before Wednesday, when parliament is scheduled to vote on a bill to dissolve itself.
In Likud, Sharon faces a two-pronged challenge for the party's leadership, most prominently from former Prime Minister Benjamin Netanyahu, a bitter rival who has trailed in recent polls. Some party officials have tried unsuccessfully to persuade Netanyahu to rally behind Sharon to save the party from fracturing and shrinking in the elections.
But besting Netanyahu is not Sharon's real problem in Likud, the party he helped to found nearly three decades ago.
Sharon has repeatedly declared his commitment to the internationally backed "road map" peace plan, which envisions an independent Palestinian state. Reasserting his leadership of Likud still would not rid him of the dissidents who oppose his diplomatic policies and would try to sabotage him in parliament.
"He is scared to win in the Likud and be stuck with the same impossible bunch of rebels, which would make it impossible for him to act," Ben Caspit, a political commentator, wrote in the Maariv daily on Friday.
Forming a centrist party with Likud allies and Labor moderates -- possibly including Peres -- beckons as an inviting alternative.
A survey by the Dahaf polling institute published Friday in Yediot Ahronot showed that in the coming election, Sharon at the head of Likud would receive 38 seats in the 120-member Knesset, to Labor's 28. As the head of a new centrist party, he would be tied with Peretz at 28-28 -- enough to be asked to put together a new coalition government, or to work out a deal with Peretz on rotating the premiership.
Likud, headed by former Netanyahu, would limp away from the election with just 18 seats -- down from the 40 it now holds. The poll of 501 people had a margin of error of 4.5 percentage points.