JERUSALEM (AFP) - Israel's Prime Minister Ehud Olmert said on Wednesday he would step down in September after a party leadership vote, but insisted he was innocent of graft allegations that have dogged his premiership. "After the election of my successor I will step down to allow a government to be formed rapidly," he said after declaring he would not run in the election in his centrist Kadima party due in mid-September. The surprise announcement marks the apex of a political storm unleashed when police launched a probe in May over suspicions he had accepted vast sums of money from a US financier to finance elections campaigns and a lavish lifestyle in the 13 years before he became premier in 2006. It also casts a long shadow on peacemaking efforts with the Palestinians and with Israel's longtime foe Syria. "I have made mistakes and I regret it," said the 62-year-old Olmert, who has faced a chorus of calls for his resignation over the corruption allegations. "I will quit my duties in an honourable, just and responsible manner, as I have acted throughout my mandate," he said in a televised announcement from his official residence in Jerusalem. "I will then prove my innocence." Olmert, who took over Israel's most powerful political post from his mentor Ariel Sharon in January 2006, has admitted he had accepted money from Morris Talansky in the latest corruption probe, but has denied any wrongdoing. State Prosecutor Moshe Lador said last week that he would decide whether to indict Olmert over the Talansky affair "very soon." In a fierce cross-examination earlier this month Olmert's lawyers called Talansky a liar and uncovered several contradictions in his testimony but the 75-year-old Jewish-American financier insisted his overall story was accurate. The latest investigation led local media and Opposition parties to renew their calls for the resignation of Olmert, who is currently facing a total of six corruption probes. Foreign Minister Tzipi Livni is widely viewed as a front-runner in the party election set for September, but Transport Minister Shaul Mofaz and Public Security Minister Avi Dichter are also expected to compete. Olmert's departure could further affect already slow-moving US-backed peace talks with the Palestinians relaunched in November with the goal of resolving the decades-old conflict by the end of the year. His departure could also derail indirect talks with neighbouring Syria relaunched in May under Turkish mediation after an eight-year freeze. Olmert took over as prime minister from Sharon in January 2006 after his mentor fell into a deep coma. He then led Kadima to victory in parliamentary elections in March that year. His government was plunged into turmoil that summer however when Israel fought Lebanon's Hezbollah militia to a bloody 34-day stalemate widely viewed as a failure in Israel.