By Ori Lewis

JERUSALEM, May 2 (Reuters) Israeli Prime Minister Ehud Olmert's political future appeared increasingly in doubt today after a senior member of his party backed his ouster over sharp criticism of his conduct in last year's Lebanon war.

The centrist Kadima party's faction leader, Avigdor Yitzhaki, one of the most influential lawmakers in Israel's parliament, said Olmert had lost the confidence of his party and the nation and must quit to make way for a new government.

A frontrunner to replace Olmert, if he resigns, is Foreign Minister Tzipi Livni, who was quoted telling aides ''he must go.'' ''A leader can only lead a public where he has, firstly, legitimacy and its confidence. The prime minister should act responsibly and resign to allow a new coalition to be formed by Kadima,'' Yitzhaki told Israel Radio.

The fallout, stemming from Monday's release of an official report criticising Olmert's ''serious'' failures during the Lebanon war, began with the resignation yesterday of a cabinet minister from his main governing partner, the Labour Party.

It later engulfed Kadima, whose members in parliament drafted a letter urging him to quit over the government-appointed Winograd Commission report.

Livni, Olmert's top deputy, was expected to hold talks with him today to discuss the crisis, media reports said.

The frontrunners to replace Olmert are Livni, a former Mossad intelligence operative, and Deputy Prime Minister Shimon Peres, a veteran statesman who has been prime minister on two previous occasions.

Former prime minister Binyamin Netanyahu of the rightist Likud party, a favourite in opinion polls, could also pose a challenge if Olmert's government is toppled.

CABINET MEETING Olmert will convene a special cabinet meeting today, hoping to shore up his position by appointing a former army chief to head a committee to implement the changes recommended by the Lebanon war panel.

He is also scheduled to meet in closed session with members of Kadima's parliamentary faction.

After receiving the Winograd report, which also targeted Defence Minister Amir Peretz and former army chief Dan Halutz, Olmert vowed to stay on as prime minister to oversee the implementation of its recommendations.

Like Olmert, Peretz has so far resisted pressure to resign.

Halutz stepped down earlier this year.

The groundswell against the prime minister has grown in the two days since the publication of the report, and Yitzhaki has threatened to quit if Olmert does not resign.

Yitzhaki said another Kadima member should be chosen to form a new government, though he stopped short of proposing a successor.

''I will tell the parliamentary party today that the prime minister must resign and if he does not do so, I will quit as leader of the coalition,'' Yitzhaki said.

Under Kadima's bylaws, Olmert cannot be ousted. The only course of action is to persuade him to resign, party officials say. Parliament could force Olmert out through a no-confidence vote but there does not yet appear to be a majority to do so at this time.

Despite growing dissent within Kadima, Olmert's key coalition partners have so far stuck by him, apparently keen to avoid an early election that could end up reducing their parliamentary power.

Polls published today in three major Israeli newspapers showed a solid majority of the public -- between 65 per cent and 73 per cent -- favoured Olmert's removal.

Parliament will meet in special session tomorrow on the war findings, answering motions from opposition lawmakers insisting Olmert should step down.

REUTERS SYU DS1300