Shimon Peres was ousted as leader of Israel?s Labour Party yesterday in an upset victory for a trade union chief whose vow to end a ruling alliance with Prime Minister Ariel Sharon could trigger early elections. Amir Peretz, 53, largely unknown on the international stage, was declared the winner of a rank-and-file ballot by a 42 to 40 percent margin over Peres, Israel?s deputy prime minister, who has won a Nobel Peace Prize but never a general election.

Peres, 82, immediately appealed to party officials alleging voting irregularities, his legal adviser said. Secretary-General Eitan Cabel had earlier said a party commission had rejected Peres? accusations of fraud at several polling stations. ?I expected a better evening,? a glum Peres told a news conference, clearly stunned by what commentators were calling an upheaval in Israeli politics. Pre-election polls had predicted he would coast to victory. Peres, who like Sharon is part of Israel?s founding generation, gave no indication of his next political steps. Amid chants of ?the next prime minister? from supporters after being declared party leader, Peretz said: ?This can truly be Israel?s most important hour.?

Peretz vowed to pull Labour out of Sharon?s coalition government over free-market policies he said has worsened the plight of Israel?s poor.