Former Prime Minister Ehud Barak told associates of Defense Minister Amir Peretz Friday that he will not participate in the "stinking trick" against Peretz, following Channel 1 reports that Prime Minister Ehud Olmert was planning to dismiss Peretz and appoint Barak as defense minister.

Barak made the statement after he asked to meet privately with Peretz.

On Thursday, associates of Peretz accused Olmert of trying to tilt Labor's primaries in favor of Ehud Barak, in a ploy to shift attention from Olmert's disastrous public standing. They said that dismissing Peretz would lead to toppling the government.

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Peretz, leader of the dovish Labor Party, took the post of defense minister when Olmert, leader of the centrist Kadima Party, formed his government in May. Peretz, who has a limited security background and ran his campaign on social issues, has come under fire, along with Olmert, because of the inconclusive results of last summer's war with Hezbollah guerrillas in Lebanon.

Labor is Kadima's main coalition partner. If Olmert dismisses Peretz, it could provoke a political crisis leading to new elections.

The report sent shock waves through the Labor party, whose activists cited the corruption affairs involving Olmert's Bureau Chief Shula Zaken and said Olmert was trying to rebuild his standing at Peretz's expense.

"It seems like a spin in a bid to avoid the corruption in Olmert's bureau. We are sure Olmert knows that moving a brick would bring the whole wall down," one confidant said.

Labor's secretary-general, Minister Eitan Cabel said, "Labor will not allow the dismissing of any of its ministers, internal rivalries over the leadership notwithstanding."

National Infrastructures Minister Benjamin Ben-Eliezer on Thursday called on Barak to run in the primaries so he could be appointed defense minister.

Labor sources said Ben-Eliezer and Olmert were cooperating with Barak in the latter's bid for Labor's leadership and that Barak was also behind the report that Olmert was planning to dismiss Peretz.

Labor members on Thursday night received a recorded message urging them to act together to replace the defense minister. Some of them said an associate of Barak's initiated the call.

An official statement from the Prime Minister's Office released about two hours after the Channel 1 report said that "contrary to television reports, Prime Minister Ehud Olmert has not decided to dismiss Defense Minister Amir Peretz or to transfer him to another post."

"As far as the Prime Minister's Bureau is concerned, the issue is not on the agenda," the statement said.

Behind the scenes, associates of both Olmert and Peretz held talks with each other. Peretz's people demanded that Olmert issue an official denial to the report. They said Peretz had no intention of resigning and knows of no plan to dismiss him on the prime minister's part. Peretz was continuing to focus on rehabilitating the army, they said.

Olmert's associates said it was no secret the prime minister and defense minister had not been maintaining proper work relations and that a crisis had erupted between them.

However, they said they did not believe Olmert would take a unilateral step to oust Peretz and would prefer for the latter to leave the Defense Ministry voluntarily. In this case he would be given a senior social portfolio.

Senior Defense Ministry sources said that the present situation, in which the prime minister had no respect for the defense minister, was grave. They said it was unprecedented for the prime minister not to consult the defense minister before going on an official meeting with the president of Egypt.

Despite the official denial from the Prime Minister's Bureau, Peretz is aware that Olmert has been trying for some time to pressure him to leave the Defense Ministry, they said.

However, Peretz also knows that due to the political complexity and Olmert's political weakness, Olmert cannot fire him, although he is permitted to do so by law. As long as the Winograd Committee has not released its report, Olmert is restricted from making such a drastic move.

MK Shelly Yachimovich said Olmert was trying to divert attention from the corruption affairs surrounding him through the use of "tricks and political manipulations."

"The public has tired of him. He had better stop dealing with spins and start dealing with affairs of state. If Olmert really wants to change the cabinet make-up, then as a first step he should himself resign," an associate said.

MK Yoram Marciano, head of Labor's Knesset faction and Peretz's associate, lashed out at Olmert: "This is another ugly spin of Olmert's advisers. The prime minister is afraid of what is happening to his public position and therefore is besmirching the defense minister. He is doing this after Labor helped him pass the budget, which he could not have done otherwise."