Livni concerned for peace talks

Ms Livni has until 3 November to form a coalition government

Time is running out for a peace deal between Israel and the Palestinians, Israel's Prime Minister designate Tzipi Livni has warned.

In her first foreign policy speech since winning the leadership of the governing party, she said extremists were gaining ground as talks faltered.

But she stressed her commitment to the US-backed talks that began last year.

Ms Livni was asked to form a coalition after Prime Minister Ehud Olmert quit last month amid corruption allegations.

She replaced Mr Olmert as leader of Kadima, the largest party in the Israeli Knesset, and has until 3 November to build a coalition.

'Complex reality'

She told a foreign policy forum that the peace negotiations between Israel and the Palestinians, begun in Annapolis last November, would continue because "doing nothing has its own price".

ISRAELI KNESSET SEATS Current coalition (67 seats): Kadima: 29 Labour: 19 Shas: 12 Pensioners party: 7 Other parties: Likud: 12 Yisrael Beitenu: 11 National Union-National Religious Party: 9 United Torah Judaism: 6 Meretz: 5 Arab parties: 10 Coalition needs 61 for majority Tzipi Livni: Israel's 'Ms Clean' Q&A: Israeli leadership change

"Israel wishes to arrive at peace with all of her neighbours - the Palestinians, Syria, Lebanon and the Arab nations," she said.

But Ms Livni, who has been serving as foreign minister in Mr Olmert's government, said time was "not working in the favour" of Israel and regional moderates.

"Israel is dreaming of peace, but its feet are firmly rooted in a complex reality," she said.

Ms Livni suggested the goal was a full peace treaty, endorsing the Palestinian view of the negotiations as an all-or-nothing affair, with no partial agreements on some issues but not others.

Mr Olmert favoured agreement on a declaration of principles or a status report on areas of agreement.

Also unlike Mr Olmert, Ms Livni did not spell out the shape of an accord as she saw it.

In a newspaper interview last week, Mr Olmert said peace would mean Israel giving up control of the West Bank or equivalent territory as well as much of the Arab section of Jerusalem.

Russia visit

Meanwhile, Mr Olmert is on his way to Russia in one of his last foreign trips as prime minister.

He is expected to press Moscow not to sell advanced missiles and weapons technology to Iran and Syria.

Mr Olmert faces several corruption allegations, and police have recommended he be indicted over two of the inquiries.

He is accused of misusing cash payments from a US businessman, and of double-billing government agencies for trips abroad.

He denies any wrongdoing.