Former Israeli Prime Minister Ehud Barak has won the country's Labor party leadership election.

Mr Barak won 51.2% while ex-security chief Ami Ayalon gained 47.7%, with the remaining ballots spoilt, with 103,000 party members eligible to vote.

Incumbent Amir Peretz, who was heavily criticized after the 2006 Lebanon war, was knocked out in the first round.

Both candidates said they wanted to see PM Ehud Olmert resign over his handling of the war.

"Today starts the long and arduous task ... to unify the state of Israel ... It is also the beginning of our mission to repair the people's faith in its leaders," said Mr Barak after the result was confirmed.

Earlier, correspondents said neither Mr Barak nor Mr Ayalon were likely to bring down the coalition led by Mr Olmert's Kadima party, as opinion polls indicate the right-wing Likud opposition would be likely to win in the event of a general election.

Mr Barak, casting his vote north of Tel Aviv, said: "I call on voters to think about who is better to lead the country in a time of war and who has the most courage to make peace."

Both candidates said they wanted to replace Mr Peretz as defense minister, a role that he took, unusually in Israeli politics, despite not having had a military career.

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Ehud Barak