The eldest son of Ariel Sharon, the Israeli Prime Minister, today faces jail after pleading guilty to breaking campaign financing rules.

Omri Sharon admitted falsifying corporate documents, perjury and violating the party funding rules during his father's campaign in primary elections for the Likud Party in 1999. Mr Sharon was later elected Prime Minister in 2001 and 2003.

Omri, who must now step down as a member of Israel’s parliament, pleaded guilty to the charges at the opening of his trial before a court in Tel Aviv.

Dan Sheinman, his attorney, told Israel Radio that his client is demanding a light sentence in return for the guilty pleas. More serious charges of fraud and breach of trust were dropped.

The charges carry a maximum of seven years in prison. Although prosecutors have insisted that Omri must be sent to prison, the term is expected to be much shorter.

No details were given in court today but Mr Sheinman explained that under campaign law in 1999 politicians were allowed to collect only 800,000 shekels (£97,243) for party primaries. Omri collected about 6 million shekels (£747,000).

Menachem Mazuz, the Attorney General, decided to press charges against Omri in July, but had to wait until a Bill was passed limiting MPs’ immunity against prosecution before the court formally indicted him in late August.

Ariel Sharon was questioned by police but has always insisted he had no knowledge of the financing of his campaign, saying it was run exclusively by his son who is one of his closest advisors.

In court papers, prosecutors have said that a shell company controlled by Omri, Annex Research, took contributions from companies in Israel and abroad worth some $1.3 million (£750,000) which were illegally ploughed into his father’s campaign.

Evidence taken from taped phone conversations and documents in the 41-year-old’s handwriting formed part of the evidence against him, with prosecutors arguing that he disguised the true purpose of Annex and effectively "laundered" the incoming funds. Foreign funding of political campaigns is illegal in Israel.

Last year, the Prime Minister was cleared of involvement in a corruption probe into a property scandal known as the Greek island affair, in which he was suspected of accepting a bribe via his other son Gilad when he was foreign minister in the late 1990s.

The law has never been enforced, and character witnesses will testify that Omri is an upstanding public figure, Mr Sheinman said.

In addition, he said, lawmakers are now updating the legislation with more realistic figures.

"All of these things have great significance regarding the punishment, not regarding the actual violation of the law. We admit the violations ... he (Omri Sharon) takes full responsibility for this," Mr Sheinman said.

"He has to pay a price, but the price has to be very, very moderate."

Ariel Sharon’s two terms as Prime Minister have been marred by scandals over campaign financing and real estate deals since 2003, but he has not been indicted

Last June, Meni Mazuz, the Israeli Attorney-General, dropped a long-running bribery case against Mr Sharon, citing lack of evidence, despite the chief prosecutor’s recommendation to indict him.

The Public Security Minister, Tzahi Hanegbi, was forced to resign as police probed allegations that he appointed dozens of political allies to posts when he previously served as environment minister.

The Infrastructure Minister, Yosef Paritsky, was also sacked after he was exposed for trying to incriminate a party colleague in the run-up to primary elections.

Israel’s state comptroller delivered a withering verdict on the culture of cronyism and corruption at the heart of government in May, warning that it threatened the whole fabric of the state.

Presenting his annual report, Judge Eliezer Goldberg denounced "the corruption of power" which he said was "more dangerous than any other threat to which the state is exposed."

Times Recommends

• The Japanese Prime Minister is doomed: or is he?
• Brighton company 'involved in cyber attack'
• The art of survival: it’s all in the mind