The head of Israel's largest Kadima party, Tzipi Livni, has admitted defeat in attempts to form a coalition government, reports from advisers say.
Israel appears set for a snap election after the head of the governing Kadima party, Tzipi Livni, said she had given up efforts to form a coalition.
Ms Livni had given potential partners until Sunday to say whether they would join. She is now likely to recommend an early general election.
"I'm not willing to be blackmailed," she told Haaretz newspaper. "And therefore, I will go to elections."
She faced a major setback on Friday after the ultra-religious party Shas said it would not join a coalition.
She had given potential partners a Sunday deadline to decide whether to join Kadima. But on Friday the key religious Shas party turned her down.
She has the support of the Labour party but is short of a majority.
Ms Livni is expected to meet President Shimon Peres later on Sunday.
Ms Livni could still attempt to form a government with a numerically fragile grouping - or she could admit defeat.
After briefing him on her attempts to form a new government, Mr Peres has three days to further consult.
In that case, an early general election is likely, BBC correspondent Tim Franks says.
But analysts say Ms Livni's decision effectively means that new elections will have to be held, probably in February or March.
Shas said its two key demands - to increase child welfare payments and keep Jerusalem stays off the negotiating table with the Palestinians - had not been met.
The next parliamentary poll had been scheduled for 2010.
'Political blackmail'
Correspondents say she will have a tough fight against Binyamin Netanyahu, the leader of the main right-wing opposition party.
Ms Livni is scheduled to meet President Shimon Peres at 1700 (1500 GMT) on Sunday to brief him on her efforts to form a new government.
Demands
Israeli radio stations have been reporting that she told a meeting of her advisers on Saturday evening she had decided not to continue the attempt.
Late on Saturday, she told Haaretz that the alternative to elections was "for me to capitulate to extortion".
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Her coalition efforts suffered a big blow on Friday, when Shas pulled out of talks with Kadima.
The coalition attempt is now seen as extremely fragile
The religious party said its two key demands - to increase child welfare payments and keep Jerusalem off the negotiating table with the Palestinians - had not been met.
An unnamed political source told Reuters news agency after the meeting that she had "decided to opt for elections".
She will tell Mr Peres "we couldn't give in to political blackmail and we should hold elections", the source said.
Some time in February is being mooted by the Israeli media as the likely date for the election.
Israel has a notoriously febrile and fast-changing political atmosphere, our correspondent adds.
But the latest reports suggest that the foreign minister believes an early general election may prove the only option, he adds.
If that were the case, she would have a tough fight against Binyamin Netanyahu, the leader of the main right-wing opposition party, our correspondent says.
