Labour agrees to end Sharon deal

Amir Peretz wants to make economics a key election issue

Israel's Labour Party has backed plans by its new leader, Amir Peretz, to pull out of Prime Minister Ariel Sharon's governing coalition.

Delegates at a party convention in Tel Aviv approved the proposal after Mr Peretz used his first major speech as leader to denounce Mr Sharon's legacy.

He said Mr Sharon's rule had deepened poverty and humiliated many immigrants.

Mr Peretz and Mr Sharon agreed in talks last week to hold national elections before the end of March.

At the Labour convention, the party's secretary general confirmed that the vote to leave government was passed by an "absolute majority".

'Security demon'

Addressing members, Mr Peretz, who made his name as the leader of Israel's largest trade union, called for a new "social pact" to end what he termed the "Messiah era" in Israeli politics.

"All those years the Likud told the unemployed, the hungry children, contract workers, and a million salaried workers who earn minimum wage - wait a little, we need to take care of terrorism right now," he said.

"All those years they've been scaring us with the security demon," he said.

Mr Peretz, who was born in Morocco, did briefly address security issues.

He told delegates he supported an undivided Jerusalem and opposed the right of return for Palestinian refugees, Israel's Haaretz newspaper reported.

Reports on Sunday indicated that Likud and Labour have agreed to hold elections on 28 March.