JERUSALEM (AFP) - Israeli President Shimon Peres said on Monday that efforts to form a new government had failed, paving the way for snap elections that could turn on the future of the Middle East peace process. "After having consulted with representatives of all parliamentary factions I would like to inform you that I see no possibility of forming a government," Peres said in a letter he delivered to parliament. The announcement came one day after governing Kadima party leader, Foreign Minister Tzipi Livni, called for early elections following the failure of efforts to form a new government coalition to replace outgoing Prime Minister Ehud Olmert who is stepping down over corruption claims. "In the coming days Israel will enter a crucial electoral period," Peres told the Knesset, Israel's parliament, saying security and the Israeli-Palestinian conflict were among the dominant issues. Elections should now be held early next year, although an exact date is yet to be set. Kadima, the left-of-centre Labour and the right-wing Likud were already mapping out the outlines of their political agendas for the campaign. "We have been in a period of uncertainty for several months and therefore the elections should take place as soon as possible," Livni said before Peres's announcement. The foreign minister said she abandoned efforts to form a coalition because she would not cave in to potential partners' demands. "I was ready to pay a certain price... but I wasn't ready to mortgage the future of Israel," Livni said after Shas set budgetary conditions and insisted that the fate of Jerusalem could not be included in peace talks. Livni was elected Kadima leader last month to replace the scandal-plagued Olmert, who will remain interim premier until a new government is in place. Livni made it clear she would maintain Olmert's policies favouring the creation of a Palestinian state alongside Israel but with the Jewish state to retain its major settlements in the West Bank. Both Israel and the Palestinians had pledged to try to reach a deal before US President George W Bush leaves office in January, but the talks have made little visible progress. A poll published in the Yediot Aharonot newspaper on Monday indicated Kadima would win 29 of the 120 parliamentary seats while Likud would get 26 and Labour would win just 11 seats if elections were held now. A majority of 61 MPs is required to form a government. Kadima currently has 29 deputies, Labour has 19, while Likud and Shas each have 12.