There is far more at stake in Israel's latest political crisis than the already tarnished reputation of Ehud Olmert or his crumbling coalition Government.

More than any other player in the region, the Israeli Prime Minister remains the West's best hope of progress in Middle East peace efforts. President Bush has insisted repeatedly that a Palestinian-Israeli peace deal is possible by the end of this year, when he hopes to see the creation of a Palestinian state.

Tony Blair has set up his office in Jerusalem to pursue confidence-building measures on the ground and channel billions of pounds in foreign funding into the Palestinian economy. On a separate track, the Israelis revealed last week that they had opened indirect peace talks in Turkey with their implacable enemy, Syria.

On every front Mr Olmert's leadership is indispensable. Should he go all this will be put on hold, while his succession is resolved. Meanwhile, Mr Bush's own authority will be weakening as November's US presidential elections approach. It is a fair bet to predict that the rest of the year could be a diplomatic write-off.

If Tzipi Livni, the Foreign Minister, takes over temporarily while Mr Olmert defends himself against bribery charges, then the current peace efforts might progress, albeit at a slower pace.

But the alternative — the withdrawal of Labour from the coalition — will mean the collapse of the Government, a period of campaigning, fresh elections and the formation of a new administration. The whole process could take months.

According to latest polls, the right-wing opposition Likud party would be likely to win most seats in a future Knesset, opening the way for Binyamin “Bibi” Netanyahu to form a government with other right-wing parties opposed to current peace efforts.

Those who have followed Mr Olmert's two years in power may not be sad to see him go. The former Jerusalem Mayor has proved a veritable Houdini by surviving so long in power. He weathered blistering criticism of his disastrous war in Lebanon two years ago and has until now fended off a succession of corruption scandals that would have brought down a less able politician. But apart from staying in power, he has little to show for his tenure. His period in office may be regarded as an era of wasted opportunities. Israel failed to bolster the position of moderate Palestinian leaders, such as President Mahmoud Abbas, and instead witnessed the strengthening of militant groups supported by Iran, such as Hamas and Hezbollah.

Some will hope that the end of the Olmert-Blair-Bush era in the Middle East will offer a new generation of leaders a chance to clinch peace in the region after six decades of conflict. But there is also the danger that Mr Olmert's removal will simply leave a power vacuum. Instead of slow progress, the peace process could go into reverse, with the region plunged into a new phase of violence.

Times Recommends

• Both sides blame US for worsening relations
• Stieg Larsson: losing the plot over his cash
• Odd creature paralysed by incompatible parts