Israeli President Shimon Peres met more parliamentary faction leaders on Monday to discuss the formation of a new coalition government, a day after the resignation of Prime Minister Ehud Olmert.

Olmert, who could face criminal indictment in corruption probes, submitted his resignation to Peres on Sunday, four days after he was replaced by Foreign Minister Tzipi Livni as leader of the ruling Kadima party in an internal election.

Since Olmert's resignation, Peres has met representatives of the four largest parties -- Kadima, Labour, Likud and Shas -- and will hold talks with the remaining nine factions on Monday.

Israeli media reported Peres would most likely nominate a party leader to form the next government on Monday and indicated that Livni was his top choice.

"(Peres) is meeting with many factions today, and something might change, so I can't say for sure he will choose Tzipi Livni, but that's how it's looking," Peres spokeswoman Ayelet Frish told Army Radio.

Livni met late on Sunday with Defence Minister Ehud Barak, who is head of Labour, the second largest parliamentary bloc, to negotiate a possible partnership.

"It was a good, businesslike meeting," Barak said after the talks, adding the two would meet again.

If Livni, Israel's chief negotiator in peace talks with the Palestinians, gets the nod she will have up to 42 days to try to put together a coalition.

If successful she will become Israel's first woman prime minister since Golda Meir in the 1970s.

Olmert could stay on as interim prime minister for weeks or even months until a new coalition government is formed or a new parliamentary election held.

The political uncertainty has dimmed even further prospects of an Israeli-Palestinian peace deal, which the United States had hoped Olmert and Palestinian President Mahmoud Abbas could achieve this year.

Failure to build a coalition would lead to an early parliamentary election, otherwise not due until 2010.