JERUSALEM ( CNN ) -- Israeli Foreign Minister Tzipi Livni declared victory Thursday in an election to lead the ruling Kadima Party , putting her on a path that could make her Israel 's first female prime minister in 34 years . Kadima candidate Foreign Minister Tzipi Livni is the chief Israeli negotiator with the Palestinian Authority . Livni won with 43.1 percent of the vote , claiming a 431-vote margin of victory over Transportation Minister Shaul Mofaz , the Kadima Party said . Mofaz announced Thursday he will take a `` time out '' from politics and will resign his seat in the Israeli parliament , the Knesset . But he indicated he does not intend his departure from front-line politics to be permanent . Livni 's election marks a stunning rise for the 50-year-old , who entered the Knesset less than 10 years ago . `` It 's a leap of faith for the people , '' analyst Avi Shavit said . `` They decided to trust a candidate they do n't know much about . '' She may owe her victory over Mofaz , a former general , to her reputation for clean hands in a party losing its leader to allegations of graft . `` Kadima members are more concerned about the corruption threat inside Israel than the security threat from Hamas and Iran , '' Israeli columnist Gil Hoffman said . As new leader of the ruling party , Livni will try to form a coalition government and become prime minister after the departure of Prime Minister Ehud Olmert , who has been dogged by allegations of corruption . Olmert plans to inform the Cabinet on Sunday that he will resign , said Mark Regev , his spokesman . He has congratulated Livni and pledged to help make a smooth transition , according to Regev . Livni told reporters Thursday that she intends `` to bring together Kadima factions and to go on this new path together . '' Watch Livni at the ballot box » . Her slim margin of victory stood in contrast to exit polls that had shown her with a commanding lead over Mofaz and other rivals . Mofaz telephoned Livni to congratulate her on the victory , according to Israel Radio . Livni said she hoped to ensure stability in Israel 's government . `` We need to face complicated threats . We need to face security threats . We need to move forward , and there is economic instability , '' she said . Livni has about 42 days to form a coalition government . If she fails , there could be early elections that could see another party leader elected as Olmert 's successor to the prime minister post . There are many possible scenarios that could take place in the following months . Ehud Barak -- leader of the Labor Party , which holds the most parliamentary seats among Kadima 's coalition partners -- could pull out of the coalition . That could force early elections , or force the government to take on new coalition partners who could restrict Livni 's ability to negotiate with the Palestinians . If elections are called , Barak , a former prime minister , could vie for the top spot -- but polls show he may not have enough support . Some observers think that former Prime Minister Benjamin Netanyahu , head of the opposition Likud Party , could steal the show in the end . Whoever succeeds Olmert as prime minister will be handed a set of daunting challenges , including determining the fate of Israel 's talks with the Palestinians , its fledgling indirect talks with Syria and its tough talk on Iran 's nuclear aspirations . Livni , who is more widely known outside Israel than her main challenger , is the chief Israeli negotiator with the Palestinian Authority as the two sides work toward a peace deal . She refuses to be tied to the Bush administration 's vision of a peace deal by the end of this year . `` We want to reach an agreement which at the end of the agreement we can find the words 'end of conflict , ' '' she said . `` And in doing so , it takes time . '' To her supporters , she is squeaky-clean and a welcome change to Olmert , whose resignation comes amid mounting corruption charges . `` She 's very honest , very sincere and I hope she 's going to do whatever she says , '' one of her supporters said . `` We have to give her a chance and I 'm willing to do it . '' CNN 's Paula Hancocks and Michal Zippori contributed to this report .
NEW : Runner-up , Transportation Minister Shaul Mofaz , resigning from Knesset . Livni claims victory in vote for leadership of ruling Kadima party . Win could make her Israel 's first female prime minister in 34 years . Livni beat Mofaz by a narrow margin .