The vote ended a chaotic session of the 120-member Knesset, where Mr Netanyahu's right-wing coalition has crumbled over his handling of the Wye River land-for-security accord signed in October.

The opposition bill passed a first reading by 81 to 30 with four abstentions and five members absent.

Members of Mr Netanyahu's own Likud party also backed the bill - acknowledging that the embattled leader can no longer command a stable majority.

BBC Jerusalem Correspondent Lyse Doucet assesses the prospective contenders

Correspondents say April is the most likely time for polling day - around the time Palestinian leader Yasser Arafat is proposing to declare a Palestinian state.

The vote followed a last ditch appeal by Mr Netanyahu to set up a national unity government.

The BBC's Paul Adams: Netanyahu's last ditch appeal for national unity was rejected

But his proposal to delay the vote for 72 hours for discussions was swiftly rejected by opposition Labour leader Ehud Barak.

"This government is at the end of the road. To my great regret the right path is to go for elections," he said.

Members also threw out an appeal by Mr Netanyahu for cross-party backing for five conditions he has set the Palestinians for resuming the Wye deal.

That call was defeated by a vote of 56-48 with two abstentions.

Prospective challengers

The early elections bill will require two further readings to become law, possibly as early as next week.

By allowing parliament to be dissolved Mr Netanyahu will avoid a no confidence vote and give himself more time to prepare for elections.

Apart from Mr Barak, prospective challengers for the prime minister's job include the popular General Amnon Lipkin-Shahak, who has yet to declare his candidacy, or even say which party he would stand for.

The general would have to wait 100 days after officially retiring from the army before being allowed to run for office.

Correspondents say Mr Netanyahu could also face challengers from within his own faction.

Peace in the balance

Knesset: Voting on elections

Since signing the Wye River memorandum, Mr Netanyahu has taken a hard line with the Palestinians in what is seen as an attempt to keep his seven party coalition government together.

However, many on the right are said to be unimpressed, and correspondents predicted some would have joined his opponents on the left to bring down the government in a confidence motion.

On Sunday, the Israeli cabinet voted to support Mr Netanyahu's decision to suspend the Wye agreement.

But Mr Netanyahu, who took office in May 1996, told the Knesset on Monday it was clear he would not get enough support in a vote on his handling of the peace process.

"If the majority of members of parliament don't want to support this, there is one choice.

"Either we change the people, or we change the Knesset. I recommend we change the Knesset," he said.