Israeli Defense Minister and Labor Party chairman Ehud Barak is contemplating delivering an ultimatum to Prime Minister Ehud Olmert, whereby he will demand the premier either resign or agree on a date for early elections, local daily Ha'aretz reported Wednesday.

Barak will hold consultations with senior party officials on Wednesday, after which he is expected to make a statement at a 1:30 P.M. (1030GMT) press conference.

Barak was considering forming an emergency government with the right-wing opposition Likud party that would leave out Olmert's centrist Kadima party, the report said.

As Olmert's senior coalition partner, Labor's departure would leave the premier without a majority with which to rule, Ha'aretz said.

The news came hours after Morris Talansky, the American-Jewish businessman, said Tuesday in court testimony in Jerusalem that he gave Olmert 150,000 US dollars out of his own pocket.

Talansky gave the testimony as a key witness for the prosecution in the investigation into allegations that Olmert accepted illegal payments from the US financier.

Talansky told the court there were no records of how the money was spent. But he did not expect or get anything in return for his money.

The testimony was a trial procedure, though the state has not yet decided whether to indict Olmert or his assistant Shula Zaken.

A second court session, in which Olmert's attorneys would cross- examine Talansky, was set for July 17. Talansky promised to come back to Israel for that purpose.

(Xinhua News Agency May 28, 2008)