The expected announcement came yesterday after Peres held marathon talks with different political factions represented in the parliament during the course of the day.
"I agree to take upon myself the role of forming a government," Livni, the leader of the single largest faction in the parliament, said yesterday after receiving a folderfrom the President officiallyconferring on her the title ofPrime Minister designate.
She called upon all parties to join hands in a unity government, including the right-wing Likud party, led by ex-premier Benjamin Netanyahu. She quit to join hands with former Prime Minister Ariel Sharon in newly floated Kadima, and stressed that "these are not normal days for Israel".
"There are great diplomatic and economic challenges facing it. The first priority that is right for Israel is a government that will serve to the end of the current term, in late 2010," she said.
The immediate task for the former agent of 'Mossad spy agency', who has seen a meteoric rise in Israeli politics since her entry to the Knesset for the first time in 1999, would be to cobble a coalition with the support of at least 61 parliamentarians within 28 days.
The President gave her the nod to form a government despite the expressed support of only 38 Knesset members.
Peres can extend this period by another 14 days if she fails to form a government within the first four weeks, but at the end of six weeks heis authorised to call a different Knesset member to form a coalition within an additional 28 days.
If the secondmember of parliament tapped to form a government also fails to do so within the stipulated time,snap polls will have to be heldwithin the next 90 days.
Party's backing the previous government under Ehud Olmert have been sending confusing signals to the Prime Minister designate, but politcal analysts believe that it is just a pressure tactics to get their demands met and they will be forced to join the government to avert polls which can bring hardline Likud leader Benjamin Netanyahu to power.
The right-wing Shas party, crowned the 'kingmaker' under the existing politcal environment, has demanded that Livni change the current finance minister who has been opposing their demands on the Child Welfare scheme.
Netanyahu and Russian immigrant backed right-wing party, Israel Beteinu, have made clear that they won't join the government and prefer snap polls.
The Prime Minister designate also faces serious challenges regardingongoing negotiations with the Palestinians with the Shas party demanding that there should be no discussions on the fate of Jerusalem, which is also claimed as the capital of a future state by the Palestinians.
The Palestinian Authority (PA) has welcomed the victory of Livni in the ruling Kadima party primaries calling it a sign of continuity in talks,but theefforts of US President George W Bush to leave a legacy by striking a peace agreement between the two sides by the end of his term seems to be fadingunder thecurrent politcal instability nagging Israel.