In a televised public statement made from his official residence in Jerusalem, Mr. Olmert said he would not take part in the leadership election for his Kadima party, opening the way for the next party leader to try to form a new government.

“I have decided not to compete in the primaries in Kadima,” he said. “I will resign from my role as prime minister to allow a new leader to form a new government efficiently and quickly.”

The first-round of the party elections is scheduled for Sept. 17. Contenders for the party leadership include Foreign Minister Tzipi Livni, who leads the Israeli negotiating team in talks with the Palestinians, and Shaul Mofaz, the more hawkish transportation minister and former army chief and defense minister.

The announcement marks the end of at least this stage of Mr. Olmert’s political career. He has been under pressure in a high-profile investigation, suspected of illicitly receiving large sums of cash over a long period from a Long Island businessman. He has not been indicted and denies any wrongdoing, but had already pledged to resign if charged. He again vowed in his statement on Wednesday to continue to fight to prove his innocence.

The September vote will be the first leadership vote for Kadima, which was established in late 2005 by Ariel Sharon, who was then the prime minister. Mr. Olmert became acting prime minister when Mr. Sharon had a stroke in January 2006 and prime minister when Kadima won general elections in March 2006.

In late May, Ehud Barak, the Labor Party chief and defense minister, and a potential rival for the post of prime minister, called for Mr. Olmert to step aside pending the outcome of the police investigation and advised Mr. Olmert’s colleagues in Kadima to replace him. If they did not, he warned, he would work in Parliament to move up elections scheduled for 2010.”

Mr. Olmert’s decision about whether to run in the September election comes after the cross-examination of Morris Talansky, the Long Island businessman Mr. Olmert is suspected of receiving cash from. Mr. Talansky gave damaging testimony against Mr. Olmert in an early court deposition in May.

Mr. Talansky, a resident of Woodsburgh in Nassau County and a frequent visitor to Israel, has testified in an Israeli court that he gave Mr. Olmert about $150,000, mostly in cash. Mr. Talansky said he made the payments between 1992 and late 2005, years when Mr. Olmert was mayor of Jerusalem and a government minister. He became prime minister in 2006.

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