Facing burgeoning corruption allegations and plummeting popularity, Prime Minister Ehud Olmert said Wednesday he will resign in September, throwing Israel into political turmoil and raising doubts about prospects for peace with the Palestinians and Syria.

Olmert said he would not run in his party's primary election Sept. 17 and would step down afterward to allow his successor to form a government. But because of Israel's political system, he could serve until well into next year.

  Israeli Prime Minister Ehud Olmert delivers a statement to the media at his official residence in Jerusalem, Israel, July 30, 2008. Olmert said on Wednesday he would resign after his ruling Kadima party chooses a new leader in a September 17 internal election. (Xinhua/GPO)

His decision will end a long public career that has been clouded by allegations of corruption that have battered him in recent months.

Olmert's popularity dropped below 20 percent at one point after his bloody but inconclusive war in Lebanon in 2006.

Political analysts had been predicting his resignation for weeks as details of the latest allegations against him dominated the news.

The most damaging inquiry focuses on Morris Talansky, a 76-year-old American Jewish businessman who testified that he handed envelopes stuffed with tens of thousands of dollars to Olmert before he became prime minister, in part financing a luxurious lifestyle of expensive hotels and fat cigars.

Talansky gave lengthy public testimony for days in a Jerusalem courtroom, defending his allegations under cross-examination by Olmert's attorneys -- although Olmert has never been formally charged with a crime.

The latest allegation was that Olmert double and triple-billed trips abroad to Jewish institutions, pocketing the difference or financing trips for relatives. Other allegations include a shady real estate deal and questionable political appointments -- all before he became premier.