Israeli Prime Minister Ariel Sharon and the new Labor Party leader, Amir Peretz, agreed Thursday to hold early general elections, setting the stage for a quick campaign season even though Sharon has yet to decide which party he will lead into the voting.

In their first meeting since Peretz won the Labor leadership in a vote last week, the men agreed in principle to hold elections between late February and the end of March, Peretz told reporters after the 20-minute encounter. The next election had been scheduled for November 2006.

Peretz, who had promised to withdraw Labor from Sharon's coalition government if he wrested the party leadership from Shimon Peres, said whatever date Sharon chooses in that time frame "is acceptable to me." He added, "The earlier the better."

The timeline announced Thursday means that election campaigns in Israel and the Palestinian territories will likely unfold simultaneously over the next few months, putting efforts to revive the dormant peace process largely on hold. Palestinians are scheduled to elect a new parliament Jan. 25.

Peres joined Sharon's government last year to ensure that the prime minister could carry out his proposed withdrawal from the Gaza Strip. He had lost his majority in parliament after several small religious and nationalist parties left his coalition to protest the withdrawal. Sharon still faces organized opposition from within his hawkish Likud Party over the withdrawal, and Peres alienated many Labor members for remaining in the government after the evacuation was completed two months ago.

Between them, Labor and Likud hold just over half of the Israeli parliament's 120 seats. Peretz's pledge to leave the coalition, reiterated after his victory, essentially guaranteed that elections would be moved up. A vote to dissolve the parliament and set a date for early elections is scheduled for Monday.

Aides said Sharon would also like elections to be held quickly to take advantage of his popularity among the Israeli public and because internal party opposition makes it impossible to pass a national budget by the end of the year, as required. Israeli law gives the government a grace period through March to pass a budget, but Sharon has indicated he would prefer to have a new parliament by then.

"If possible, we shall go to the people in February," Israel's largest daily newspaper, Yedioth Aharonoth, quoted Sharon as saying.

Sharon's aides say he will decide within one week whether to remain in Likud, a movement he helped found 32 years ago, or run as the head of a new, more moderate party. Many are advising him to leave, even though he is gaining popularity within Likud as opinion polls show him to be the party's best chance to maintain its leading role in parliament.

After withdrawing from Gaza, Sharon, 77, has one of the highest approval ratings for a second-term prime minister in decades. But he barely survived what was essentially a no-confidence vote within Likud shortly after the Gaza evacuation, and several Likud members are now challenging him for the party leadership.

Likud's worries have grown since Peretz, 54, was chosen to head Labor. Peretz has promised to pursue traditional Likud voters, many of them, like him, Sephardic Jews of North African origin. He has outlined a campaign that will focus on greater ethnic equality in the Jewish state, a more populist economic policy and peacemaking with the Palestinians.

Some Sharon aides say they fear that that even if Likud members rally around the prime minister before the elections, they would block steps he may wish to take with the Palestinians once he wins, whether new peace negotiations or another unilateral withdrawal from territory Israel has occupied since the 1967 Middle East war.

Meanwhile, Israeli soldiers shot and killed two Palestinians on Thursday in the West Bank city of Jenin after the men tried to evade a checkpoint, the Israeli military said. The military identified the men as members of the radical Palestinian group Islamic Jihad, but the military wing of the ruling Fatah movement claimed them as members.

Mohammed Zaid and Ahmed Abahra, both 18, were shot by four Israelis dressed in civilian clothes who emerged from a parked Mercedes as the men passed, Palestinian witnesses said.

Amir Peretz, the new elected head of the Labor Party, had promised to withdraw it from Sharon's coalition.