Jerusalem ? A fiery union leader won a stunning victory over Shimon Peres in the leadership contest for Israel’s Labor Party, officials said today, dealing a blow to the elder statesman that could endanger the country’s shaky governing coalition.

Amir Peretz has promised to pull Labor out of Prime Minister Ariel Sharon’s government, raising the likelihood of early elections. The defeat also could spell the end of Peres’ distinguished, six-decade political career. Peres had been heavily favored to win.

Party secretary Eitan Cabel, announcing Peretz’s victory, said the labor leader captured more than 42 percent of the vote, while Peres took just less than 40 percent. A third candidate, former party leader Binyamin Ben-Eliezer, got 17 percent.

The outcome will have deep implications for Sharon’s shaky coalition.

Peres, a former prime minister who is now vice premier, wanted to keep Labor in the government until elections scheduled in November 2006.

He led the party into the governing coalition this year to shore up support for Sharon’s plans to withdraw from the Gaza Strip. The pullout divided Sharon’s Likud Party and without Labor’s support, the plan could not have been carried out.

Amir Peretz gestures after casting his ballot in the Labor Party's primaries at a polling station in the southern Israeli town of Sderot. Peretz unseated veteran Israeli politician Shimon Peres in Wednesday's vote.

Peretz wants to steer the party back to its socialist roots, pull out of the coalition and force early elections. His message resonated with Israelis disenfranchised by government cuts in social spending and the country’s growing gap between rich and poor.

Sharon’s Likud Party is deeply divided after the Gaza withdrawal in September. Without Labor’s support, he will struggle to keep his coalition intact until the next election, raising the likelihood of early elections.

Opinion polls had forecast a resounding victory for Peres in Wednesday’s primary. But after two exit polls gave conflicting results, party activists hunkered down for a long night.

Peres called a surprise news conference at 3:15 a.m. to say he suspected fraud had occurred in the vote. Peres did not directly accuse Peretz of foul play, but said reports of wrongdoing had to be checked.

“At this stage, we ask to check the complaints,” he said. “We are turning to the legal institutions of the party to look into this.”

But party officials rejected the fraud claim, clearing the way for a Peretz victory.

The defeat was a major embarrassment for Peres, who enjoyed double-digit leads in opinion polls, and cemented his image as a perennial loser.

While Peres, a Nobel peace laureate, is widely revered abroad, he has had trouble connecting with Israeli voters and failed in five previous elections for prime minister.

Peres, 82, repeatedly has emerged from the political wilderness. But political analyst Hanan Crystal said the defeat might mark the end of his career.