JERUSALEM -Prime Minister Sharon and his main political rivals agreed yesterday to hold elections early next year, a decision likely to freeze any plans to capitalize on Israel’s Gaza withdrawal to restart Middle East peace talks.

Mr. Sharon, who remains Israel’s most popular politician, had resisted moving up the election scheduled for next November but changed his mind after the Labor Party threatened to bolt the coalition, putting the survival of his government in doubt.

A series of urgent election-related meetings yesterday overshadowed a fresh, hard-won agreement reached two days earlier on reopening the vital Gaza-Egypt crossing, illustrating that until a new government is in place, Israeli leaders will be concentrating on domestic politics instead of peacemaking.

Palestinian Arabs, too, are heading into an election season, with parliamentary balloting set for January 25, featuring candidates from the Islamic terrorist group Hamas for the first time, mounting a serious challenge to Palestinian leader Mahmoud Abbas.

There had been hopes that the pullout from the Gaza Strip would jump start efforts toward a full peace accord between Israel and the Palestinian Arabs, but the intervening weeks were dominated by haggling over the border crossing – an issue finally resolved with the direct intervention of Secretary of State Rice.

The surprise selection last week of fiery union leader Amir Peretz as Labor Party leader and candidate for prime minister also threw the Israeli political world into turmoil. Mr. Peretz campaigned on a promise to force new elections.

Messrs. Peretz and Sharon met yesterday and agreed to move up the election. Mr. Peretz said Mr. Sharon would call the poll for late February or sometime in March, meaning a relatively short campaign in Israeli terms. Formation of a new government could take up to two months after that.

The head of the opposition Shinui Party, Joseph Lapid, met with Mr. Sharon later yesterday and said they agreed on a March ballot.

“On the one hand, we want to shorten the process, but on the other, we have to give time to prepare for elections, and so we agreed they would be in March,” Mr. Lapid told the Associated Press.

Mr. Sharon’s spokesman, Asaf Shariv, said only that the prime minister wanted to hold elections as soon as possible. The prime minister plans to consult with other political parties on possible election dates before a scheduled parliament vote on Monday on dissolving the government, Mr. Shariv said.

Soon after the agreement to hold early elections was reached, Israeli forces killed two Palestinian Arab militants outside the West Bank town of Jenin. Palestinian officials condemned the attack and said they feared the violence would intensify in the run-up to the vote.

“I hope that the Israeli election campaign will not be marked by more Palestinian blood,” a Palestinian Arab negotiator, Saeb Erekat, said.

The source of the turmoil dates to Mr. Sharon’s surprise announcement almost two years ago that he would withdraw from Gaza and part of the West Bank, reversing his decades of action to build new settlements and expand existing ones.

The pullout, completed in September, splintered his Likud Party and forced him to reshuffle his Cabinet, bringing in Labor, a dovish mainstream party that traditionally has favored withdrawal from much of the West Bank and Gaza and was Likud’s main rival.

Mr. Peretz wants to renew the rivalry on economic and social issues, as one of the few leading Israeli politicians who maintains that domestic poverty and social inequality are more important matters than Israel-Palestinian peacemaking.

Despite the tight timetable, Israel’s political parties might realign before the election. Mr. Shariv said Mr. Sharon has not decided whether to remain in Likud or, instead, to create a new centrist party that reflects his changed outlook.

That would leave Likud, which Mr. Sharon himself stitched together from several hard-line parties in the 1970s, as a bastion of opponents to making further concessions to the Palestinian Arabs.