Lawyers representing Ehud Olmert yesterday cross-examined a key witness in a corruption probe against the Israeli prime minister, hoping to discredit allegations that Olmert illicitly accepted cash-stuffed envelopes from an American businessman to help fund a luxurious lifestyle.

The businessman, 75-year-old Morris "Moshe" Talansky, appeared nervous in an Israeli court room, drumming his fingers on the table, fidgeting with a plastic cup and at one point asking for a break. He insisted he told the truth in previous testimony.

Lawyers spent hours grilling him about previous testimony and attempted to undermine his credibility by pointing out what they suggested were Talansky's frequent, unfounded lawsuits and an untoward attempt to secure a fat severance package from a Jerusalem hospital.

The questioning of Talansky is seen in Israel as perhaps Olmert's last chance of political survival. Talansky's testimony in May seriously damaged Olmert's credibility among Israelis. The resulting outrage prompted Olmert's Kadima Party to set new leadership elections, to be held by Sept 25.

Olmert's premature departure from office could seriously hamper or delay his government's efforts to conclude a peace deal with the Palestinians and resume full negotiations with the Syrians.

Olmert has consistently denied any wrongdoing. He has said he will resign if he is indicted.

"Today the cracks in the police and state prosecutors allegations will be revealed," said Amir Dan, a public relations consultant Olmert hired privately to present his position concerning the corruption allegations in media interviews.

"The Israeli public will discover that they (police) are trying to take down a serving prime minister based on unfounded charges," Dan told Israel Army Radio.