By Dan Williams

JERUSALEM, May 6 (Reuters) - Israeli Prime Minister Ehud Olmert's top partner in government, Defence Minister Ehud Barak, does not expect him to survive a new police investigation and is eyeing a run for top office, political sources said on Tuesday.

But they said that Barak, whose centre-left Labour party now shores up Olmert's centrist Kadima in the ruling coalition, is unlikely to bolt and trigger early elections for fear they would be won by hawkish former Prime Minister Benjamin Netanyahu.

"Barak is weighing his options, but it's clear that no one in Labour wants to hand over the country to a right-wing bloc, especially at this time," a confidant of the defence minister said, referring to nascent Israeli-Palestinian peace talks.

"Barak has little doubt that Olmert is on his way out, but the question is: Elections now, or later?" the confidant said.

Already the focus of a series of corruption scandals in which he has denied any wrongdoing, Olmert was interrogated at short notice by police last week over fresh allegations barred from publication under a court gagging order.

In an interview on Israel Radio, Barak said that Olmert, like any other suspect, was innocent until proven guilty.

"I hope for everyone's sake, and for Olmert's sake that it turns out the suspicions that are circulating are baseless," Barak said, adding that the only information he had about the case was what he had read in the media.

But the Barak confidant and another political source said they had knowledge of the case and believed its gravity could force Olmert to step down.

The prime minister on Sunday shrugged off such speculation as "vicious rumours" and said he was staying on.

Barak, a former chief of Israel's armed forces, served as prime minister between 1999 and 2001 but was voted out after peace negotiations with the Palestinians collapsed in violence.

SNAP ELECTIONS

An Olmert resignation would mean snap elections which, to judge by recent opinion polls, would be swept by Netanyahu given Israeli bitterness over the costly 2006 Lebanon war and jitters at the rise of Islamist Hamas in the Palestinian territories.

Olmert could, instead, take a leave of absence, in which case his powers would be assumed by Kadima's Foreign Minister Tzipi Livni, who is also Israel's chief peace negotiator.

"Many in Labour see Livni as the safe bet for now -- a way of letting diplomacy run its course," the second source said.

"But still, the consensus among Barak and other senior Labourites is that elections will take place by year's end."

Olmert's newest legal woes came a week before a visit by U.S. President George W. Bush to celebrate the 60th anniversary of Israel's founding and press for progress in talks on the creation of a Palestinian state in the West Bank and Gaza Strip.

Bush wants Olmert and Palestinian President Mahmoud Abbas to sign an accord before he leaves office in January.

The next Israeli ballot is slated for 2010. Before the latest affair broke, Olmert, whose approval ratings plummeted after the Lebanon war but have since rallied somewhat, vowed to see out his term and be reelected. (Additional reporting by Ori Lewis; Editing by Charles Dick)

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