FACTBOX: Israeli leader sets stage for political change

(Reuters) - Ehud Olmert shook up Israeli politics by announcing he will resign as prime minister after his ruling Kadima party chooses a new leader in September. His announcement on Wednesday set the stage for three scenarios:

* Opinion polls show Foreign Minister Tzipi Livni and Transport Minister Shaul Mofaz, a former defense chief, are favorites to win Kadima's leadership contest. Either could forge a coalition similar to the current one. It would take office once sworn in by the Knesset, Israel's 120-member parliament, when it returns from recess in late October. Olmert would remain caretaker prime minister until then.

* Some of Olmert's bickering coalition partners may balk at joining a coalition with the more politically moderate Livni if she became Kadima leader.

These parties could swing behind rightist parliamentary opposition leader Benjamin Netanyahu and force President Shimon Peres to ask Netanyahu to try to form a coalition. Such a government might be reluctant to pursue U.S.-backed peace talks with the Palestinians or indirect negotiations with Syria.

* Olmert's resignation could prompt a majority in parliament to opt for an early election. Parliament could dissolve itself and set an election date before the scheduled date of 2010.

An election must be held within five months of the Knesset voting to dissolve itself, but the gap is usually shorter in practice. Recent opinion polls show Netanyahu's Likud party would emerge strongest if a vote were held now.

Such a scenario could leave Olmert as caretaker prime minister until a government is formed after the election.