Israeli Defence Minister Ehud Barak said today that he was leaving the Labour Party and forming a new faction in parliament, completing a split in the party over the handling of peace talks with the Palestinians.

The move did not immediately threaten Prime Minister Benjamin Netanyahu's parliamentary majority, but is expected to rob the coalition of its most moderate members.

Mr Barak, a former prime minister and one of the most powerful members of the government, is expected to stay in the ruling coalition with four followers. But Labour's eight remaining members are expected to quit, leaving Mr Netanyahu with only a narrow majority of 66 seats in the 120-seat chamber.

"It's clear to me that's what will happen," said Cabinet Minister Avishai Braverman, a Labour politician not splitting off to join the new Barak-led faction.

Mr Barak, along with his four allies, announced his move in a letter obtained by The Associated Press. A formal announcement was expected later today.

Mr Barak made the move to pre-empt growing discontent within Labour over his support of the government's handling of peace efforts with the Palestinians.

With talks stalled for more than three months, an increasing number of Labour members had urged him to pull out of the government because of the impasse. One member, Daniel Ben-Simon, quit the party last week in protest at Mr Barak's decision to remain in the government.

Labour is the most dove-like faction in an otherwise hardline government.