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Outgoing Prime Minister Ehud Olmert arrived at the President's residence in Jerusalem Sunday evening to formally submit his resignation to President Shimon Peres after almost 33 months in office.

Olmert earlier announced his decision to step down at the start of the weekly cabinet meeting, held in Jerusalem.

Following the formal resignation, Olmert's cabinet becomes an interim government, and Peres was to begin a round of consultations with all the Knesset factions later Sunday in efforts to establish a new coalition.

Peres was scheduled to meet with Kadima faction chair Yoel Hasson, Labor's Eitan Cabel, Likud's Gideon Sa'ar and Shas' Yakov Margi. Each MK will be given 45 minutes to recommend to the president a candidate who would be best suited to establish a coalition.

Though it is not certain, Peres is expected to task Foreign Minister Tzipi Livni, who succeeded Olmert in his post as Kadima Party chair in a primary held last week, with establishing the coalition.

Peres convened a press conference at his residence following Olmert's visit, and thanked the outgoing premier for his "contribution to the people and the sate during so many years of public service ? as mayor of Jerusalem, a minister in Israel's government and as prime minister."

"The security of the state of Israel and the welfare of its citizens have been at the center of his work as prime minister. Some of his actions will remain a mystery," Peres continued.

"I appreciate the respectable way in which the prime minister chose to pass the leadership on. It is a difficult decision, and this is a difficult night for him," the president added.

Peres and Olmert - who have already spoken several times about the resignation - were expected to formulate a timetable for Olmert's gradual leaving of office.

The final decision may be delayed, however, by Peres' departure Monday for New York, where he will attend the United Nations General Assembly. The president is scheduled to remain in New York for a week, during which time he will deliver a speech to world leaders.

Earlier Sunday, Olmert told the cabinet that he gave his blessing to his successor, Livni, and vowed to "support with all of my strength" her efforts to form a coalition government.

Over the weekend, Livni was busy lobbying potential partners to join a new coalition under her leadership.

Olmert's associates said Saturday that he intends to serve as head of a caretaker government until an alternative government is formed or until general elections take place.

Divisions emerged within Kadima on Friday regarding when the premier should step down. Vice Premier Haim Ramon said that Livni should ask Olmert to postpone his resignation until she has succeeded in forging a new government.

Livni on Friday called on Olmert to keep his promise to leave office in the aftermath of Wednesday's Kadima primary, saying, "We have a country to run."

Olmert is stepping down amid a number of corruption allegations, after a tenure troubled by Israel's inconclusive 2006 war against Lebanese Hezbollah guerrillas and months of peace talks with the Palestinians that have yielded no breakthroughs.

Even though Livni is now head of Kadima, she does not automatically become prime minister. Peres would have to first appoint her to try to put together a governing coalition - something he is expected to do after Olmert formally resigns. After assigned that task, Livni would have six weeks to form a new government. Should she fail, new elections would be called for early 2009, a year and a half ahead of schedule.

Over the weekend, Livni met with leaders of two small factions outside the coalition, hoping to shore up any government she could put together. Any accords that might emerge from talks with the Palestinians and recently renewed, indirect negotiations with Syria would benefit from broad-based parliamentary backing. The current government controls 67 of parliament's 120 seats.

Neither Kadima nor its coalition partners appear eager for a new election, fearing they would be ousted from power. But the ultra-Orthodox Shas Party, which could be key to building a new coalition, has already said it would not join a government willing to share Jerusalem with the Palestinians.

As lead peace negotiator, Livni is committed to discussing all the outstanding issues between Israel and the Palestinians. The fate of Jerusalem, whose eastern sector the Palestinians claim for a future state, is at the core of the conflict.