Both hawkish Foreign Minister Ariel Sharon and Jerusalem Mayor Ehud Olmert have announced they will not seek the party's nomination, with Mr Sharon urging his Likud Party colleagues to back Mr Netanyahu.

"We must close ranks around the man who was elected to head the movement because there is simply no other choice in a democracy," Mr Sharon told a meeting of Likud's central committee in Tel Aviv.

Commentators say the decision by the popular Jerusalem mayor not to stand could be enough to salvage the embattled prime minister's chances of winning his party's nomination.

Waiting in the wings: Uzi Landau (top left) looks on

As expected the central committee has set the party primaries for 25 January, with a second round if necessary on 8 February.

So far the only declared challenge to Mr Netanyahu's Likud nomination comes from the powerful right-wing Chairman of the Parliamentary Defence and Foreign Affairs Committee, Uzi Landau, who himself admits his chances of success are "minimal".

Fighting talk

Launching his bid for re-election as party leader, Mr Netanyahu defended his handling of the peace process and warned a vote for the opposition Labour Party was a vote for Palestinian leader Yasser Arafat.

"Arafat intends to unilaterally declare [on 4th May] a Palestinian state with Jerusalem as its capital. Now, I hear that he is considering postponing that declaration so that, God forbid, it will not help me win the elections.

"Well, I can reassure him. I will win either way," he told his party's central committee.

With the Wye peace deal certain to feature prominently in the campaign, Mr Netanyahu launched a blistering attack on the opposition Labour Party, saying they could not to be trusted on security.

The attack angered Labour leader Ehud Barak who said Mr Netanyahu's speech was an "incitement" to violence.

"What would Netanyahu say if we said that a vote for him was a vote for Hamas?" Mr Barak asked referring to the Palestinian militant group responsible for a number of attacks on Israeli targets in recent years.

Mr Netanyahu has been under fire from all sides for his handling of the peace process. This culminated in a vote in Israel's parliament, the Knesset, last week to bring forward elections, with April thought to be the most likely time.