Jerusalem ? A deal was emerging Tuesday for elder statesman Shimon Peres to leave the Labor Party, his political home for 60 years, and join Ariel Sharon’s government if the prime minister is re-elected in March.

A Sharon associate and newspaper reports said Peres likely would be charged with developing the outlying Galilee and the Negev regions if Sharon retains power. The associate spoke on condition of anonymity because he was not authorized to discuss policy with the media.

Speaking in Barcelona, Spain, on Tuesday, Peres declined to confirm his move.

“I shall decide tomorrow night,” he said.

But he had warm words for Sharon and none for Labor, whose members ousted him as party chairman earlier this month in favor of union firebrand Amir Peretz.

“The real change is not in the Labor Party. The real change is in the Likud Party,” he added. “Mr. Sharon took a different direction for a Palestinian state. He wants to continue the peace process.”

Sharon announced last week he was quitting the hard-line Likud to establish a new centrist movement. Speculation has been rife since Peres lost the Labor leadership Nov. 10 that he would join forces with Sharon ahead of March 28 elections.

That speculation intensified Tuesday after a Peres protege, lawmaker Dalia Itzik, left Labor for the Sharon camp.

Also Tuesday, a Sharon ally said the prime minister hopes to clinch a final peace deal with the Palestinians if re-elected – the clearest sign yet of Sharon’s agenda for a possible third term.

Sharon’s new party, Kadima, “will strive in this term to reach a final status agreement with the Palestinians and to set Israel’s permanent boundaries,” Cabinet Minister Meir Sheetrit told Israel Radio. “We understand that to reach a final status agreement, there is no choice … but to create two states for two nations.”

Last week, Sharon quit the Likud Party he helped to found because he was convinced that dissidents opposed to last summer’s withdrawal from Gaza would try to stifle further concessions to the Palestinians.

Days later, parliament’s term was cut short and early elections were called for March.

Kadima, dominated by former Likud lawmakers, held its first formal meeting Monday. It sketched out broad policy goals, including peaceful coexistence with a future Palestinian state, but did not declare the creation of that state as a goal for the coming term.

Recent polls show Sharon headed toward a third term and able to put together a moderate coalition government with Labor, which also supports a final peace deal.