Military radio reported on Thursday judicial officials could decide in the coming weeks whether there were grounds to indict Sharon himself.

They quoted Sharon as saying after Wednesday's indictment of property developer David Appel: "I will continue to be prime minister next year, all the rumours about my eventual resignation or about a voluntary suspension of my functions are just foolishness."

Justice Minister Yossef Lapid said in a statement that Sharon "has no reason to suspend his activities, while he has not even been indicted," adding, however, that the prime minister should do so if he were indicted.

Wednesday's move against Appel was just the latest episode in a series of corruption allegations tied to the financing of Sharon's 1999 campaign for the leadership of his Likud party, that may finally force him to resign.

It comes as the Middle East peace road map lies in tatters, while Sharon vainly tries to garner support for a controversial plan to "disengage" from the Palestinians and faces pressure in some political circles to revive peace talks with Syria.

Scandal over property deal

Appel was indicted for trying to bribe then foreign minister Sharon through his son Gilad, along with deputy prime minister Ehud Olmert, then mayor of Jerusalem, in exchange for their help in securing a major Greek property deal.

"I will continue to be prime minister next year, all the rumours about my eventual resignation or about a voluntary suspension of my functions are just foolishness."

Ariel Sharon, Israeli Prime Minister

At the time, Appel, a key figure behind the scenes in Likud, was planning a huge tourism project on a Greek island which needed authorisation from Athens.

Appel tried to secure the help of Sharon and Olmert, both of whom were candidates for the Likud leadership, in exchange for financing their respective campaigns, the indictment said.

Appel also offered three million dollars to Gilad in payment for consultancy services on the project, even though the premier's son had no particular expertise in the area.

The three million was never paid, but Gilad instead received a $100,000 "salary", then a second payment of 2.6 million shekels ($590,000).

At the same time, he gave 50,000 shekels ($11,300) to Olmert, having convinced him to organise a dinner with the mayor of Athens to promote the island venture.

'Everything will work out'

Appel's lawyer Moshe Israel said "all the charges are  unfounded and everything will work out".

Since the start of the inquiry, Sharon, who has been interrogated by the police several times, has exhibited nothing but calm.

The Israeli public appears to be under no illusions about Sharon, with a poll published on Friday showing that 67% believe he was directly involved in the illegal financing of his 1999 campaign.

Even so, only 46% believe he should resign while 51% want him to stay in power.

If indicted, Sharon could be forced to step down before his mandate ends in 2007.

Potential successors include Olmert, Foreign Minister Silvan Shalom, Education Minister Limor Livnat and, above all, Finance Minister Benjamin Netanyahu, who was prime minister between 1996 to 1999, when Sharon was foreign minister.