The two other leading figures in the new grouping, former military chief Amnon Lipkin-Shahak and Dan Meridor, also a defector from Netanyahu's Likud Party, stepped aside to give Mordechai the party's top spot, they said. The three men, joined by the popular former mayor of Tel Aviv, Roni Milo, who also recently quit Likud, made the decision after Netanyahu fired Mordechai on Saturday night, accusing him of disloyalty. Netanyahu assailed Mordechai during a televised speech for negotiating with Lipkin-Shahak and his associates on the creation of the new party to run against Likud in national elections on May 17. ``In the past weeks I have come to realise that your personal ambition supersedes any other consideration,'' Netanyahu said.

Netanyahu acted after Mordechai ignored a Fridaydeadline for registering as a Likud candidate in the upcoming parliamentary elections, signalling his decision to join the new centrist movement. Mordechai issued a stinging response to Netanyahu, saying the Likud leader ``is not worthy of my confidence and respect and I don't think he merits the confidence of the Israeli people.''

Lipkin-Shahak, who retired from the Army earlier this month to challenge Netanyahu for the prime ministership, confirmed on Sunday that he was willing to step aside for Mordechai if that would lead to Netanyahu's ouster. ``The important thing is winning and that is why I don't have any problem not leading our slate in the elections,'' Lipkin-Shahak said.

The leaders of the new party have put off until Monday an official announcement on their slate of candidates. Mordechai's departure from Likud is a severe blow for Netanyahu's re-election hopes.

A highly respected and popular former general, Mordechai, 54, joined Likud shortly before the previous elections in 1996 and iscredited with playing a major role in Netanyahu's surprise victory over then Labour Prime Minister Shimon Peres. But since they entered government, the two men have frequently clashed, with the moderate Mordechai unhappy over Netanyahu's hardline stance in peace negotiations with the Palestinians and his austerity economic policies. Netanyahu for his part often tried to sideline Mordechai, viewing him as a potential rival. Opinion polls indicate that Mordechai will be eliminated in the first round of voting for prime minister, who is directly elected by voters in parallel with elections for the parliament.

Netanyahu is expected to face the head of the main opposition Labour Party, Ehud Barak, in a second round run-off election on June 1. The two men were running neck-and-neck in the polls before Mordechai's defection. But if the new centrist movement backs Barak in the second round as expected, it appears likely Netanyahu will be defeated.