This development could also effectively torpedo current peace talks between Palestinian President Mahmoud Abbas's Palestinian Authority (PA) and the Israeli government as political attention focuses on the latest internal crisis facing the Jewish state.

Senior law enforcement officials told the Israeli media that a major development was expected today in the criminal probe against Olmert

When the story first broke last week, Israel's Channel 1 quoted a senior legal source as saying, "Olmert is in a grave situation. It is doubtful whether he will be able to continue to hold his position."

Due to the gag order placed on the media by the police, details of the criminal investigation are uncertain, but it will be clear within the next couple of days whether Olmert will be indicted.

This is the fifth police investigation of Olmert over the past two years.

The police's national fraud unit questioned witnesses in the case Sunday, along with other suspects, such as Olmert's former bureau chief Shula Zaken, who was questioned for the third time in the past week.

Zaken has refused to cooperate with police and has been placed under house arrest. Investigators from the Tax Authority said they had enough evidence to indict her, and the prosecution is expected to decide shortly whether to charge her.

Zaken was suspended from her post as bureau chief a year ago, due to allegations she was involved in making improper appointments in the Israel Tax Authority. She recently began working with Olmert again, but not as bureau chief. Olmert has been questioned regarding the Tax Authority allegations against Zaken.

These latest developments are expected to have serious implications on the political-security arena, especially on Egyptian efforts to achieve a ceasefire in the Gaza Strip, as Israel's attention would be focusing on Olmert and not advancing peace talks.

In view of the uproar surrounding the new Olmert case, the Egyptian intelligence chief, General Omar Suleiman, has once more delayed his visit to Israel, which was originally scheduled to take place this week.

U.S. Secretary of State Condoleezza Rice, currently on a visit to Israel, has also expressed concern saying the Olmert's ability to move forward in regard to peace negotiations could be seriously hampered by the police investigation.

Meanwhile, Palestinian Prime Minister Salam Fayyad and the head of the PA's negotiating team, Ahmed Qurei have concluded that if the allegations against Olmert are founded then negotiations could grind to a halt and the only group to benefit from the situation would be Hamas.

Be that as it may, Hamas could also possibly have something to lose. Most of the senior leadership in the Gaza Strip is keen to secure a short-term ceasefire, or "tahadiyeh".

If they learn that Israel is delaying accepting the Egyptian initiative, they may renew, or even step up Hamas' role in attacks against Israel especially as Israel celebrates Remembrance Day and it its upcoming 60th Independence Day celebrations on May 18.

Several days ago, Hamas threatened to embark on an unprecedented escalation if Israel didn't respond to the tahadiyeh and followed the threat with a heavy barrage of Qassam rockets which were fired at Sderot, an Israeli town bordering the Gaza Strip.

The PA for its part has continued to meet with Olmert in Jerusalem during the last few days as they are counting on Olmert's track record as a survivor of past accusations and investigations.

Two years ago Olmert was accused of altering the terms of the sale of Bank Leumi, one of Israel's major banks, to help a friend who was considering buying it. Olmert, who was finance minister at the time, denied any wrongdoing and the police subsequently dropped charges.

However, they are still investigating two other cases in which Olmert is alleged to have behaved improperly. In one case he is alleged to have appointed political allies to positions throughout the trade and industry ministry when he headed it between 2003 and 2005.

In another, police are investigating the purchase of a house in Jerusalem which a government watchdog concluded was sold below market value by a developer. Olmert has strenuously denied any wrongdoing and has insisted that the investigations are part of a political vendetta against him.

Last year an extensive poll on government corruption found that Olmert was considered the most corrupt politician in Israel in 2007, against a background of stiff competition. Fifty-six percent of the public defined his behavior as "corrupt to very corrupt."

Olmert, who heads the Kadima party, also received this dubious distinction in 2006. The poll was conducted by the prestigious Maagar Mochot survey institute for the Fifth Annual Sderot Conference on Social and Economic Policy.