JERUSALEM - Under an ethics cloud and facing the possible collapse of his governing coalition, Israeli Prime Minister Ehud Olmert yesterday cleared the way for his party to hold early primaries that could end his political career.

The move might keep his government together in the short term. But it also could mean that his party, Kadima, will choose a successor this summer as a way of easing him out of power.

Also yesterday, Olmert and his top security officials postponed a decision to authorize an Israeli military invasion of the Gaza Strip, choosing instead to allow Egyptian-mediated truce talks with the extremist Islamist group Hamas to continue.

Olmert has been under increasing pressure to step down since reports surfaced last month that he had received more than $150,000 from an American businessman, much of it in cash. Although the money was ostensibly meant for campaign expenses, the businessman, Morris Talansky, testified that he believed Olmert had used some of the money to fund a lavish lifestyle.

Olmert told two top party leaders yesterday that they could go ahead with preparations for a primary, even though one is not due until 2010. Olmert had earlier opposed the idea of an early primary.

"No date has been set for primaries, but the process of discussion has begun," said Olmert spokesman Mark Regev. He said Olmert had not made a decision on whether he would compete. The selection of a new chief for Kadima would effectively end Olmert's premiership.

Israel's political crisis comes as the government faces tough choices over how to handle daily rocket fire from Gaza, as well as apparently fruitless U.S.-backed negotiations with the Palestinian Authority over a possible peace deal.

Yesterday, Israel's security cabinet, a select group of ministers, said it would continue to work with Egypt toward a cease-fire with Hamas but would also instruct the military to prepare for major operations if the talks break down.

"We are giving the Egyptian initiative every chance to succeed," Regev said. "The current situation is unsustainable and intolerable. It has to end one way or another."

A Hamas spokesman in Gaza, Fawzi Barhoum, dismissed Israel's announcement, and said the truce talks were merely a way "to justify an attack on the Palestinian people."

Hamas and its allies have launched daily rocket attacks since the group seized control of Gaza one year ago. Hamas is officially pledged to Israel's destruction but has indicated a willingness to accept a long-term cease-fire agreement along the 1967 borders.

U.S. Secretary of State Condoleezza Rice is due to arrive in the region this weekend to try to accelerate negotiations between Israel and the Palestinian Authority, which holds sway in the West Bank.

Palestinian Authority Prime Minister Salam Fayyad yesterday indicated that the goal of a deal by the end of 2008 was unachievable. "I have a strong feeling that is tantamount to certainty that a solution won't be achieved this year," he said.