Labor Party Chairman Shimon Peres yesterday waived his demand to serve as vice prime minister in the upcoming coalition, and instead will be a deputy premier.

The compromise resolves one of the main problems that has been threatening to delay establishment of the new government next week. Now it appears Prime Minister Ariel Sharon will present his new coalition for Knesset approval Monday.

MK Haim Ramon (Labor) reached a deal yesterday with the head of the Likud's negotiation team, attorney Yoram Rabed, specifying that Peres will hold the most senior position among ministers.

According to the coalition agreement, Peres' position will not legally affect the authority of Vice Prime Minister Ehud Olmert. If a situation arises whereby Sharon cannot fulfill his duties as prime minister, Olmert will automatically assume the role.

Prior to yesterday's compromise, Labor Party sources had harshly criticized Sharon for not stepping up efforts to form a new coalition, particularly conducting talks with United Torah Judaism.

Peres' responsibilities in the new government are still undefined, and the final agreement will be reached between Sharon and Peres. Senior Labor officials said the party has achieved its demands: seniority in the government and a complete partnership.