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Legal preparations necessary for creating a new party headed by Prime Minister Ariel Sharon were completed on Saturday, but his aides said the prime minister had not yet made up his mind whether to quit the Likud, and would announce his final decision by Monday at the latest.

Meanwhile, National Union leader Avigdor Lieberman proposed Saturday afternoon that Likud, National Religious Party and the National Union merge into a single right-wing bloc in the upcoming general elections, if Sharon decides to quit Likud.

Lieberman said on a program aired on Israel Radio that the right needs to form a common front to impose checks on Sharon and the Labor Party.

Sources close to Sharon said his main concern about staying in the Likud is the composition of the party's Knesset slate, which is virtually certain to contain many MKs who disagree with his diplomatic program and would therefore try to thwart it.

"The last few weeks have proved that even with only six rebels, it is hard to function - for instance, if they decide to vote against ministerial appointments," said one. "If the prime minister is going to have trouble functioning in the next Knesset, what's the point of staying [in the Likud]?"

But the associates of Sharon say that a primaries challenge from MK Benjamin Netanyahu is not a major factor in his decision.

They said the premier was not particularly worried about Netanyahu running aginst him for chairmanship of the Likud because Sharon is convinced he can win.

While Sharon intends to decide by Saturday night, he might not announce his decision until he meets with the Likud Knesset faction on Monday, a close associate said.

Netanyahu, for his part, has decided not to abandon the Likud leadership race, despite polls showing him trailing Sharon by a large margin. Sharon's associates said Netanyahu has put out feelers for a deal in which he would quit the race in exchange for being named Sharon's number two, and added that Sharon would consider such a deal.

But Netanyahu's associates denied this, adding that he intends to launch his primaries campaign next week.

Foreign Minister Silvan Shalom, meanwhile, hinted he might run for Likud chairman if Sharon decides to quit the party, Israel Radio reported Friday.

At a meeting with Sharon's closest advisers Thursday night, the majority recommended he quit the Likud. However, several of his associates said, Sharon gave no hint as to whether or not he intended to follow this advice. Sharon currently appears to be undecided, they said, and he is carefully weighing the advantages and disadvantages of both options.

Moreover, said a person who was present at the meeting, none of the three people whose advice Sharon trusts most - his sons, Omri and Gilad, and public relations expert Reuven Adler - voiced their views on the matter Thursday night.

Sharon's need to decide quickly stems from the fact that new elections are only a few months away: At a meeting between Sharon and Labor Party chairman Amir Peretz on Thursday, the two decided that the vote would take place sometime between the end of February and the end of March.

Until the Likud faction meeting two days ago, most Likud members, including Sharon's close associates, were predicting that he would opt to stick with the party, thanks in part to Labor's surprise choice of Peretz as its prime ministerial candidate. Because Peretz appeals to two traditional Likud constituencies - the working class and mizrahim (Jews of Middle Eastern descent) - he is perceived as a threat to the Likud, and was therefore thought likely to inspire the party to unite behind Sharon.

However, Sharon's associates said, Wednesday's faction meeting demonstrated that the anti-disengagement rebels still constitute an opposition to Sharon, and that increases the likelihood of him leaving the party.

Shinui chairman Yosef Lapid, who met with Sharon on Thursday to give his views on when new elections should be held, also said that his impression from this meeting was that Sharon planned to quit the Likud.

Likud rebel MK Michael Ratzon said Thursday evening that the Likud would emerge victorious in the upcoming Knesset elections with or without Sharon as its leader.

On Sunday, Sharon will meet with MKs from several other parties, with the goal of reaching agreement on a date for new elections by Monday, thereby enabling the Knesset to vote to dissolve itself. Lapid told Sharon that any date after March 1 would be fine with him. Most commentators, however, expect that a date in mid-March will ultimately be chosen.