Jerusalem ? Facing burgeoning corruption allegations and plummeting popularity, Prime Minister Ehud Olmert said Wednesday he will resign in September, throwing Israel into political turmoil and heightening doubts about prospects for peace with the Palestinians and Syria.

Olmert said he would not run in his party’s primary election Sept. 17 and would step down afterward to allow his successor to form a government. But because of Israel’s political system, he could serve until well into next year.

His decision will end a long public career that has been clouded by allegations of corruption that have battered him in recent months.

Olmert’s popularity dropped below 20 percent at one point after his bloody but inconclusive war in Lebanon in 2006.

Political analysts had been predicting his resignation for weeks as details of the latest allegations against him dominated the news.

The most damaging inquiry focuses on Morris Talansky, a 76-year-old American Jewish businessman who testified that he handed envelopes stuffed with tens of thousands of dollars to Olmert before he became prime minister.

The latest allegation was that Olmert double and triple-billed trips abroad to Jewish institutions. Other allegations include a shady real estate deal and questionable political appointments – all before he became premier.

Olmert’s brief address from his official Jerusalem residence included harsh criticism of the police investigations. He said he was choosing the public good over personal justice. Although he has consistently denied wrongdoing, he had pledged to resign if indicted.

His decision not to run in the Kadima primary sets in motion a process to choose a new prime minister. Main candidates in his party are Foreign Minister Tzipi Livni and Transport Minister Shaul Mofaz, a former defense minister and military chief of staff.

Polls show Livni with an advantage in the primary. If she were to replace Olmert, she would become the second female prime minister in Israeli history, after Golda Meir.

If Olmert’s successor as party leader can form a coalition, Israel could have a new government in October. If not, an election campaign could extend into 2009. Olmert would remain in office until a new premier is chosen, heading a caretaker government after he submits his resignation to President Shimon Peres.

Israel’s labyrinthine political system is weighted against a quick internal Kadima resolution to the crisis – with hard-line ex-premier Benjamin Netanyahu of Likud waiting to take advantage.

Olmert’s Kadima Party has only 29 seats in the 120-member parliament, and his successor must patch together a coalition with a majority. Olmert’s main partner, Labor, is headed by another ex-premier, Ehud Barak.