A key rival of Prime Minister Benjamin Netanyahu criticized his hawkish stance on Iran's nuclear program on Saturday, making the issue a central theme for Knesset elections expected this year.

"It's a most serious mistake to turn the issue of defense against Iran into Israel's biggest problem," Shelly Yachimovich, leader of the Labor party, said in a televised interview.

She called Iran's atomic program a "problem of the entire world," adding that "the fact we take it upon ourselves to be the spearhead is an error," in the interview on Channel 2 television.

Yachimovich backs the United States position that there is still time to see if economic sanctions and diplomacy can stop Iran seeking nuclear weapons, before deciding any military steps.

Netanyahu has rated the chances of the latest round of talks with Iran as low and thinks sanctions are not strong enough and may be providing Iran with enough time to enter a "zone of immunity" after which it may be impossible to stop its nuclear program.

Israel, reputed to have the region's sole atomic arsenal, has long said it would strike Iran to prevent it from getting nuclear weapons which it sees as a threat to its existence. Iran says its nuclear program is peaceful.

Some former Israeli security chiefs have also criticized Netanyahu's hawkish stance. His former internal security chief, Yuval Diskin, accused both him and Defense Minister Ehud Barak of having a "messianic" policy toward Iran.  

Potential partner

Opinion polls show Labor, which ruled Israel for decades but now holds only eight seats in parliament, bouncing back to second place behind Netanyahu's right-wing Likud.

With Labor seen winning up to 18 seats, and Likud about 30 in the 120-member parliament, Yachimovich could be a potential partner in Netanyahu's next governing coalition.

Yachimovich said she would not rule out joining a future Netanyahu-led government if she could not topple him, provided his coalition were to embrace a "social democratic agenda" and more diplomacy with Arab nations.

Israel should take steps to renew peace talks with Palestinians, frozen since late 2010, she said.   

A socialist-minded former journalist elected party leader in September, Yachimovich had focused her criticism of Netanyahu on economic policies blamed for housing shortages and rising food prices that fuelled unprecedented protests last year.

Yachimovich said it was "critical" to improve ties with neighboring Egypt, strained since an uprising overthrew President Hosni Mubarak last year, and also with Turkey with whom ties soured after a lethal military raid on a boat carrying pro-Palestinian activists trying to breech a naval blockade of Gaza.

The election is due in 2013 but Netanyahu's political allies have put forth a motion to hold it in September as disputes over budget cuts and military service exemptions for ultra-Orthodox Jews threaten to tear apart the ruling coalition.