Israeli President Moshe Katsav is working with parliament on a deal that will lead to fresh elections on 28 March 2006, Israeli media reports say.
Mr Sharon's move has reconfigured Israel's political landscape
Polls initially set for November 2006 are being brought forward after Prime Minister's Ariel Sharon's decision on Monday to abandon his Likud party.
Mr Sharon said he was leaving Likud to form a centrist party that will pursue peace with the Palestinians.
Likud members meet on Thursday to set a date for electing a replacement leader.
Three of the party's top brass have already announced they will contest the leadership - former Prime Minister Binyamin Netanyahu, Defence Minister Silvan Shalom and Foreign Minister Shaul Mofaz.
Launching his claim to head Likud, Mr Netanyahu described his long-term rival, Mr Sharon, as corrupt and dictatorial.
Several opinion polls in Israeli newspapers have suggested Mr Sharon's breakaway party - which has yet to choose a name - could win the election.
But BBC Jerusalem correspondent James Reynolds says the election campaign is just beginning, and much may change in the weeks ahead.
Likud leadership battle
A motion to dissolve parliament and hold early elections is likely to be approved in three separate votes on Wednesday, a parliamentary official quoted by the Reuters news agency said.
President Katsav earlier said he had consulted party leaders and they were all "in favour of early elections which should now take place".
Mr Sharon announced he was leaving Likud to form a new party on Monday, taking 14 Likud MPs with him.
LIKUD LEADERSHIP CONTENDERS
Moshe Feiglin: head of Jewish Leadership faction
Yisrael Katz: agriculture minister
Uzi Landau: member of the Knesset
Limor Livnat: education minister
Shaul Mofaz: defence minister
Binyamin Netanyahu: former prime minister
Silvan Shalom: foreign minister
His supporters say he wants to draw Israel's borders in the framework of the international peace deal known as the roadmap, and he has ruled out further unilateral pullbacks from occupied Palestinian land.
Likud, the party Mr Sharon helped found, meets on Thursday to set a date for electing a new leader - most likely in December.
Announcing his candidature for the leadership, Foreign Minister Mofaz said: "I think the Likud now needs a leader who has a combination of security experience, statesmanship and social issues."
Other candidates include Agriculture Minister Yisrael Katz, Education Minister Limor Livnat, Moshe Feiglin, and Uzi Landau.