Israeli Prime Minister Mr Ariel Sharon has announced an early general election set for February after failing to form a new right-wing coalition government.
He said his desire to preserve Israel's "special relationship" with the White House was a main consideration in deciding not to press ahead with efforts to woo ultra-nationalist parties into his minority government.
"I will dissolve the Knesset and call general elections within 90 days," he told a news conference. "The date is one of the first days of February".
Mr Sharon said he had refused to give in to "political extortion" while courting partners for the narrow coalition he had hoped to form after the centre-left Labour Party left the 20-month-old "unity government" last week.
Labour abandoned the coalition in a dispute over funding for Jewish settlements on occupied Palestinian lands. Mr Sharon also vowed the 2003 state budget that caused the dispute would be adopted.
The Knesset (parliament) last week gave its initial approval to the controversial budget but two more votes by the end of the year are still necessary.
"I will pass the budget in the second and third readings as early as possible and without growing the deficit. This is what the government has decided".
Mr Sharon said he had made "the responsible choice" and "opted for the lesser of two evils" by deciding to go to new elections.
He had tried to enlist the far-right National Union-Yisrael Beitenu party into the minority government, which would have restored his parliamentary majority.
But National Union-Yisrael Beitenu had sought a change in government guidelines that have included accepting US President George W Bush's vision of Palestinian statehood.
"I will not stray from the responsible policy of the government, change its guidelines or damage the deep strategic agreements with the United States or the special relationship my government . . . has achieved with the White House," Mr Sharon said today.