IDADI YA WATU WALIOSOMA HABARI HII:

JERUSALEM, (AFP) - Fresh from her election as the head of Israel's governing Kadima party, Tzipi Livni on Thursday set out to become the country's second woman prime minister and avert snap elections that could stall Middle East peacemaking.

In her victory speech, the foreign minister said she wanted to form a new government as quickly as possible, a daunting challenge for the new leader of a party dogged by corruption scandals and involved in uneasy alliances.

The 50-year-old Livni narrowly won Wednesday's party leadership vote to replace scandal-plagued Prime Minister Ehud Olmert, who is standing down to battle a number of corruption allegations.

Livni secured 43 percent of the vote and a lead of just one percentage point -- or 431 votes -- over her main rival, the Transport Minister and hawkish former army chief Shaul Mofaz.

The victory confirms Livni's meteoric rise to become the most powerful woman in Israel and could see her follow in the footsteps of Golda Meir who served as the country's first woman prime minister from 1969 to 1974.

"For the second time in its history, Israel has positioned itself on the frontlines of gender progressiveness and has elected a woman to head a governing party, perhaps even as prime minister," the Israel Hayom daily said.

Livni, a lawyer who first joined parliament in 1999, has a reputation for integrity that has kept her out of the scandals that have dogged Olmert and other Israeli ministers.

But the election looks unlikely to end the political turmoil brought on by the graft accusations against Olmert, as it remains uncertain whether Livni will be able to garner sufficient parliamentary support to set up a governing coalition.

"She is going to have to engage in exhausting negotiations that will oblige her to be more guileful and manipulative than she has ever had to be before," the mass-selling Yediot Aharonot said in an editorial.

The former Mossad spy, who has been leading the US-backed peace negotiations with the Palestinians, will have 42 days to form a government in order to avert an early election that opinion polls say would bring the right-wing Likud leader Benjamin Netanyahu to power.

"I will do my utmost not to disappoint you. I want to do what's best for the country," she told supporters.

But just how tough a challenge she faces became immediately obvious as the Shas party, which has played the role of kingmaker in the past, laid out its conditions for taking part in a Livni government.

Eli Yishai, who heads of the religious party, insisted this included ruling out any negotiations on the future of Jerusalem.

Israel considers the city its eternal and undivided capital, including east Jerusalem which it annexed after the 1967 war and which the Palestinians demand as the capital of their promised state.

The issue is a key sticking point in Israeli-Palestinian negotiations that were revived at a US-backed conference in November but have since made little tangible progress.

The continuing political turbulence further dims chances of reaching a peace deal by the end of the year, a goal Olmert and Palestinian president Mahmud Abbas had set at the November conference in Annapolis, Maryland.

Israel is also engaged in Turkish-mediated indirect negotiations with its neighbour Syria.

"Livni will continue with the peace process. The peace process is part of Livni's platform and is one of the main reasons she was elected," MP Yitzhak Ben Yisrael told AFP.

Palestinian negotiator Saeb Erakat said the vote was an "internal Israeli affair" but that he hoped it would lead to stability.

"We hope there will be comprehensive and serious negotiations and that the Israeli voter will choose the removal of the settlements and the wall and strong cooperation with a Palestinian partner," he told AFP.

Olmert, who announced on July 30 that he would step down once Kadima picked a new leader, has faced public uproar over a string of corruption investigations that could lead to criminal charges against him.

He is likely to wait until after the late September Jewish New Year celebrations and formally resign early next month, according to Israeli media.