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Foreign Minster Tzipi Livni said Wednesday that Prime Minister Ehud Olmert must resign in the wake of the harsh criticism in the Winograd report on his handling of the Second Lebanon War, making her the most senior Israeli official to call on him to quit.

"I told him that resignation would be the right thing for him to do," she told reporters after an hour-long meeting with Olmert.

"It's not a personal matter between me and the prime minister - this issue is more important than both of us," she said.

But a short time later, Olmert again indicated that he would not resign.

Livni said she would oppose the nomination of a prime minister from another party, and expressed confidence that Olmert's resignation would facilitate the establishment of a different government without sending the nation to the ballot box.

"I think that general elections would be a mistake. Israel needs stability. If the prime minister decides to resign, the Knesset can put together [another] government. I believe that we need a broad government that can cope with the challenges ahead."

She also indicated that she would run for the leadership of the party.

"Kadima needs to choose its leadership in a democratic manner, in primary, and when the time comes I plan to submit my candidacy," Livni said. "Now is the time to restore the public's trust in the government."

Livni said that she had supported the decision to launch a military operation on July 12, but had voted against an escalation of hostilities. She also said there had been no coordination with the Prime Minister's Office during the war.

After the press conference, Israel Radio reported that Olmert's strategic aide Tal Zilberstein had said that there is no choice but to fire Livni as early as Wednesday evening, following Livni's call for Olmert to resign.

A senior official in the Prime Minister's Office said in response to Zilberstein's statement that the prime minister is not rushing to do anything. However, the official did not deny the remarks, but said that Olmert would now work to fix the failings found in the Winograd interim report.

The official maintained that "the problem was not Olmert's, but Livni's."

At an emergency Kadima meeting Wednesday called after Livni's news conference, Olmert signaled he intended to soldier on.

"I intend to implement the recommendations of the [war] report down to the last detail," spokesman Jacob Galanti quoted him as saying.

"I am in a personally uncomfortable position, but I will not shirk my responsiblity and will fix all the mistakes," a senior official quoted Olmert as telling Kadima legislators at the closed-door meeting. The official declined to be named.

Ahead of her meeting with Olmert, Livni aides rejected a report that she would threaten to resign as foreign minister if the prime minister stayed on, saying that she had no plans to quit "for the present."

Olmert and his aides were highly critical Tuesday night of what they said was Livni's open and active role in efforts within Kadima to remove him.

Pro-Olmert MKs work to rebuff resignation calls

Senior Kadima MKs affiliated with Olmert recalled Tuesday that former Likud prime minister Benjamin Netanyahu fired Yitzhak Mordechai in 1998 because Mordechai was busy establishing the Center Party while still occupying the post of defense minister as a Likud MK.

Olmert and his aides believe that his political survival, at this stage, depends on identifying the source of the rebellion within Kadima, rather than focusing on public opinion.

"Tzipi always claims to be clean, nice and fair, but she is doing something that is unacceptable: A senior minister, who serves as deputy prime minister, is undermining him [Olmert] openly and working - through her associate, faction head MK Avigdor Yitzhaki - to recruit MKs who will vote no-confidence against him in the faction," an aide to Olmert said.

"In no properly functioning government in the world would such a phenomenon be acceptable. If Livni wants to undermine [Olmert], she should resign and carry out her plans as an MK."

Some Kadima sources said that if Livni resigned, she would receive broad public support, and this would increase her chances of taking over the premiership and the leadership of Kadima from Olmert.