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Labor Party Chairman and Defense Minister Amir Peretz is expected to bring before the party's central committee for approval on Sunday a draft decision to oppose disbanding the government and holding early elections.

Peretz proposes that Labor also renegotiate its coalition agreement with Kadima.

Labor will demand the finance portfolio in exchange for the defense portfolio currently held by Peretz. Labor will also demand an increase in old-age stipends.

In the proposal, drafted by Peretz's close Labor associates including Yuli Tamir, Raleb Majadele, and Deputy Defense Minister Ephraim Sneh, Labor will not intervene with Kadima's issues, and will not question who will replace Olmert as its head.

The central committee will meet following party leader candidate MK Ophir Pines-Paz's request to discuss Labor leaving the coalition. Calls have been made to bolt a government headed by Olmert, but if an alternate government is formed with a different leader, Labor may decide to stay.

"There is nothing preventing us from cooperating with a different candidate that Kadima will elect. We won't intervene in their issues, only we ask that there be an appropriate replacement for Olmert," Pines-Paz said.

Peretz emphasized on Thursday at a Labor party meeting that he opposes leaving the Olmert government. Peretz said he is unwilling to personally reject the prime minister, as the other Labor party chair candidates have done. Throughout the past week, Ami Ayalon, Ophir Pines-Paz, Danny Yatom, and Ehud Barak, have all called for Olmert's resignation.

The defense minister maintained that Labor should not deviate from its democratic principles and interfere with another party's politics.

"Everyone knows what an ideological gap there is between myself and the prime minister... even though, I propose to you all not to be caught for a second in populism and dictate who will lead another party, because it disrupts other democratic processes. I completely oppose the exaggerated calls for Labor to leave," Peretz said.