Israeli Foreign Minister and now head of the Kadima party Tzipi Livni arrives at a cabinet meeting in Jerusalem in June. (David Furst/Associated Press)

Israel's foreign minister declared victory Thursday in a tight race to replace Prime Minister Ehud Olmert as the head of the governing party, getting a chance to be the country's first female leader in 34 years.

Tzipi Livni, 50, said she would immediately try to cobble together a new governing coalition in Israel's fractious parliament.

"The national responsibility (bestowed) by the public brings me to approach this job with great awe," Livni said.

Official results showed Livni winning by just over one percentage point in the Kadima Party primary elections — a far narrower victory than the double-digit romp polls had predicted.

Livni, a political moderate, barely edged out hawkish rival Shaul Mofaz, a former defence minister, in a contest that could have far-reaching implications for peace negotiations with the Palestinians and Syria.

Livni said she would launch coalition talks on Friday, even though President Shimon Peres cannot officially ask her to try to put together a government until Olmert resigns.

After she is assigned the task, she will have 42 days to form a new ruling coalition.

First woman leader since Golda Meir

If she succeeds, she will become Israel's first female prime minister since Golda Meir stepped down in 1974. If she fails, the country will hold elections in early 2009, a year and a half ahead of schedule.

Olmert, who is stepping down to battle multiple corruption allegations, will remain as a caretaker leader until parliament approves a new cabinet.

A lawyer and former agent in the Mossad spy agency, Livni is already serving as lead negotiator with the Palestinians and is said to be eager to continue diplomatic efforts. Diplomacy, she says, is also her first option for resolving an international impasse over Iran's nuclear program, but military strikes cannot be ruled out.

With opposition leader Benjamin Netanyahu's right wing Likud Party polling well, neither Kadima nor its coalition partners appear eager for a new election.

But the ultra-Orthodox Jewish Shas Party, which could be key to building a new coalition, has already served notice that it would not join a government that is willing to negotiate the fate of disputed Jerusalem with the Palestinians.

Shas' position will require some deft political manoeuvring on Livni's part if she is to sidestep elections, commentators in Israel say.

Polls show a tie

Nationally, polls show Livni roughly tied with Netanyahu in popular support. A new nationwide vote would likely turn into a referendum on the current effort to forge a historic peace deal with the Palestinians.

Palestinian Information Minister Riad Malki was hopeful that peace talks could succeed under Israel's new leadership.

"We welcome the results of the election, and we are going to deal with any new prime minister in Israel," he told the Associated Press. "We hope this new prime minister will be ready to … reach a peace deal with the Palestinians that ends the occupation and allows the establishment of an independent Palestinian state living beside Israel."

With files from the Associated Press