Sept. 23 (Bloomberg) -- Foreign Minister Tzipi Livni, the head of the largest party in Israel's parliament, started talks aimed at forming a governing coalition that would allow her to succeed Ehud Olmert as prime minister.

The 50-year-old lawyer and former Mossad agent is seeking to become the first woman since Golda Meir to lead Israel at a time when the country's economy is growing at the slowest pace in five years and peace talks with the Palestinians have stalled.

``I accept the responsibility and I do not take it lightly,'' Livni said at the ceremony, broadcast live on Israel's Channel One. She immediately started conferring with other parties and said she hopes to form a broad coalition that would include former Prime Minister Benjamin Netanyahu's Likud Party.

Livni won a Kadima primary last week to succeed Olmert as party leader. Olmert, 62, who took office after Ariel Sharon suffered a stroke and fell into a coma in January 2006, resigned two days ago in the face of police recommendations that he be indicted for bribery and other charges. He denies wrongdoing and will remain as caretaker premier until a new government is formed.

Peace Talks

The next prime minister will lead Israel while it pursues Middle East peace talks and contends with what it asserts is Iran's attempt to develop nuclear weapons. The economy is facing its slowest growth in five years amid the global credit crisis.

Olmert had sought to push through the 2009 budget on schedule, winning Cabinet approval and sending it on to parliament for a vote by the end of the year. He was also working to meet a year-end deadline to reach the outlines of an agreement with the Palestinians. Both goals are in jeopardy unless Livni can form a government quickly and avoid early elections.

``I call on Likud chairman Benjamin Netanyahu to join my government that will deal together with the urgent issues before us,'' Livni said after being tapped by Peres.

Just hours after meeting with Peres, Livni was reminded of the volatility of Israeli-Arab relations when a Palestinian rammed his car into a group of soldiers at a Jerusalem intersection, injuring 17 people. The driver was shot dead by one of the soldiers.

`Heroic' Attack

The attack was hailed as ``heroic'' by Daoud Shehab, a spokesman for the Palestinian Islamic Jihad movement in the Gaza Strip, who said that such acts will help stop Middle East peace talks.

Livni campaigned for party leader saying she wants to restore confidence in government after the corruption allegations surrounding Olmert. She backs Olmert's efforts to win an agreement leading to a Palestinian state and was in charge of day-to-day negotiations with the Palestinian Authority in his administration.

``These are not normal days,'' Livni said. ``Israel faces many challenges -- security, political, economic and social challenges. Israel needs stability and a government that includes most of the parliament's parties and represents most of the country's people.''

Peace Efforts

As foreign minister she backed Olmert's efforts to negotiate a comprehensive agreement with the Palestinians that would included ceding parts of the West Bank and removing settlements there in return for peace. She has also shown willingness to negotiate a possible division of Jerusalem with the Palestinians.

Before naming Livni, Peres met with delegations from all 13 parties in parliament.

``In these meetings I came to recognize the desire of all of the factions to bring, as quickly as possible, stability and leadership, and to allow the government that will arise to confront the challenges that stand before the state,'' he said.

If Livni doesn't retain the support of the existing Cabinet or assemble a new coalition within 42 days of being nominated by Peres, then national elections would be held within months. Kadima commands 29 seats on its own, though it controls a bloc of 64 seats in the 120-member Knesset through its alliance with the Labor, Shas and Pensioners parties.

Livni was meeting today with Shas leader Industry and Trade Minister Eli Yishai and would likely also hold talks with Labor Party leader and Defense Minister Ehud Barak, Amir Goldstein, Livni's chief of staff said today.

Coalition Government

Dan Schueftan, deputy director of the National Security Studies Center at Haifa University, said he ``would bet against'' Livni being able to assemble a coalition.

``There are such competing interests that if she makes a deal with one party, it will destroy her credibility with the others,'' he said in an interview.

Barak is showing greater willingness to help Livni form a new government and become prime minister, Yediot Ahronot reported, citing unidentified aides. After initially suggesting Israel would be better served by early elections, Barak, who is defense minister, called Livni yesterday and discussed terms for his support, the paper said.

To contact the reporters on this story: Gwen Ackerman in Jerusalem at gackerman@bloomberg.net; Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net

Last Updated: September 23, 2008 07:19 EDT