NO sooner had Tzipi Livni won the leadership of the Kadima Party than she found herself installed as Israel's next "iron lady". It's easy to see why the comparisons were being made with Golda Meir, Israel's mould-breaking prime minister of the 1970s. For a start, Livni's a woman too and she also enjoys the reputation of being a feisty operator in the ultra-masculine world of Israeli politics.

However, Livni is having none of it and has consistently refused to encourage any comparisons with a politician whom David Ben-Gurion once described as "the only man in the cabinet". Meir was also a committed Zionist who claimed that there was never such an entity as Palestine and although she resigned under a cloud after the Yom Kippur War of 1973 she's still a revered name in Israel - and rightly so.

That might explain Livni's discomfort with the Meir nexus. If all goes according to plan, some time today the present Israeli prime minister Ehud Olmert will formally resign as a result of a string of corruption scandals and will immediately be appointed interim prime minister to allow Livni to form a new coalition administration. She has 42 days to persuade possible partners to come on board and although a raft of domestic issues will be up for grabs the most important issue will be the question of dealing with the Palestinians.

It's on this point that the comparisons between Livni and Meir become meaningless. Meir refused to accept that a Palestinian state ever existed or, indeed, could ever exist. Livni, on the other hand, has been central to the peace process whose outcome could be the creation of a separate territory for Israel's closest and most troublesome neighbours.

Three years ago, when Ariel Sharon decided to revise Israel's policy of building settlements in the occupied territories of Gaza and the West Bank, Livni was an early convert. Not only did she support her friend and mentor but she joined forces with him to form the breakaway Kadima party which promoted the policy of disengagement.

As a result, she was appointed the lead Israeli negotiator in the talks to create a two-state solution and during the process she has always insisted that negotiation is always preferable to confrontation.

She also understands that there comes a point when governments have to talk to former terrorists, however disagreeable that process might be. Just ask the British officials who eventually sat down with the IRA to forge the historic Good Friday agreement of 1998.

If Livni succeeds in her aim of becoming Israel's next prime minister, history could hail her as the politician who helped to create a Palestinian state, truncated though it would be due to the emergence of Hamas-controlled Gaza.

But, first of all, she has to do the wheeler-dealing that will allow her to succeed Olmert and it's by no means a done deal. The first setback came after the votes had been counted. Although Livni only beat her closest rival - transport minister Shaul Mofaz - by a wafer-thin majority he had been expected to throw his weight behind her. No such luck: having accepted defeat - somewhat ungraciously it has to be said - he threw in the towel and announced that he was taking a break from politics. That fit of pique (for so it seems) will cause unhelpful repercussions within Kadima which is already riven by factionalism.

Israel's political system is also renowned for the bitterness of the in-fighting among the rival parties and Livni could have done with a show of solidarity within her own party before she begins the tortuous business of creating a coalition. Much will depend on the orthodox Shas Party which opposes any surrender of territory in Jerusalem but could be won over by some deft horse-trading on increased and enhanced welfare payments.

Shas leader Eli Yishad has already indicated that he might throw in his lot with Livni, provided that she comes up with the goods.

However, everything will hang on the Labour Party which is led by defence minister Ehud Barak. The old soldier is a tough cookie who will demand concessions in the selection of cabinet posts but he could be convinced by the fact that his party has slumped in the opinion polls. He also knows that if Livni fails to form a new government a general election will have to be called and that could be bad news for him.

On the other hand it would be good news for Benjamin Netanyahu, the leader of the right-wing Likud Party who opposes any kind of compromise with the Palestinians. He's a straight talker too. Asked if he would ever accept a coalition partnership with Livni he responded by saying that it would be like accepting a position with Lehman Brothers. Following last week's banking collapses nothing else needed to be said.