The incumbent Israeli Prime Minister made a Richard Nixon-like "I'm no crook" speech on national television to try to rebut allegations of corruption.

It was also an attempt by Ariel Sharon to reverse a slide in his opinion poll ratings which is turning an election campaign many had expected to be a coronation into a much closer fight. Sharon's rival, the Labour leader Amram Mitzna, is no longer being written off as a no-hoper.

He was in London for a meeting with Tony Blair. And the complexities of Israeli electoral politics may yet make him a more influential figure than even he had reckoned.

When Jeremy Paxman met the Israeli Labour leader he asked him why he thought he had a better chance of bringing peace to his country than anybody else.

AMRAM MITZNA:
(LEADER, ISRAELI LABOUR PARTY)
Because I'm bringing a new alternative. An alternative to the current Government policy; which is telling the truth. We have to separate ourselves from the Palestinians and divert all our efforts and resources to deal with the challenges that we have domestically at home.

PAXMAN:
When you say separate from the Palestinians, famously you would withdraw, first of all from Gaza?

MITZNA:
Yes, we are going to withdraw settlements from Gaza and let the IDF continue to fight terrorism without the burden of guarding.

PAXMAN:
And how much of the West Bank would you withdraw from?

MITZNA:
First of all some remote settlements, but then we will open negotiations, resume negotiations with the Palestinians. Hopefully they will meet this challenge and take this chance. If not succeeded, we will also withdraw unilaterally from places in the West Bank where we shouldn't be.

PAXMAN:
Within what period of time?

MITZNA:
I think we will give at least one year for negotiation. If it fails then we will unilaterally leave some areas that it's not worthwhile to be there and to implement so many forces just to go out and keep settlements.

PAXMAN:
But, you know, we have been here before. Your predecessor, Mr Barak, came to a possible agreement with the Palestinians, which they didn't accept. Why should they accept your proposals any more lightly?

MITZNA:
Well, both people went through the last two years, they understand better that military force will bring nothing to the area. Also terrorism will not surrender the vital interest of the state of Israel. So it seems to me that after these two years, both people are ready to go back and try again, better than we tried two years ago.

PAXMAN:
Could you do business with Yasser Arafat?

MITZNA:
I'm not sure. But I think that we should make an experience, not with Arafat, but with the leadership of the Palestinian people. Hopefully, at the end of this month we will succeed to replace the government in Israel by elections and then hopefully the Palestinian people will recognise that this is another chance to resume negotiations and they will also have new leadership.

PAXMAN:
But you know that is extremely unlikely that you will win the election. I put to you that you may be a man that has noble ideals but you are a man who doesn't fit the times?

MITZNA:
No, I don't agree with you. I will do it. Even though we have only two-and-a-half weeks. I will do it and the last polls show that there is now a move from the right block to the left block which is necessary if I want to form the new government.

PAXMAN:
You really believe in the midst of this spate of suicide bombings and the rest of it that the people of Israel are ready to embrace a man like you who proposes to hand over settlements to the Palestinians?

MITZNA:
I am completely sure that the Israeli people understand better now that they have to make priorities. Priorities means that we have to get rid of what is less important in order to take care of what is much more important, which is the Israeli society and the collapsing economy in Israel. I'm sure that most Israelis do believe that it is time to make concessions. Sensitive and painful.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.