Rabin Calls on Peres to Quit Labor Party Post : Israel: He cites leader’s failure to form a government. Shamir is reported close to forging a right-wing Cabinet.

Former Israeli Defense Minister Yitzhak Rabin called on Labor Party leader Shimon Peres to resign Friday, deepening a split in the party.

Caretaker Prime Minister Yitzhak Shamir, meanwhile, was said by members of his Likud Party to be close to forming a right-wing government with the support of small far-right and religious parties.

Rabin, who is challenging Peres for the Labor leadership, blamed him for failing to form a left-wing government dedicated to peace talks with the Palestinians after pulling his party out of a national unity Cabinet with Likud in March.

Shamir was given the task of assembling a government after Peres was unable to do so.

“I believe that whoever is in the lead in any system . . . should take responsibility whenever it fails,” Rabin, 68, told Israel radio. “I still hope the one who was in the lead will take responsibility and will draw conclusions.”

Recent opinion polls show Rabin is more popular than either Shamir or Peres among the Israeli public.

A senior Shamir aide said the strife in Labor makes the formation of another national unity government impossible.

“Even if Mr. Shamir wanted to form a broad government, in the current state of Labor, there is no partner for such a government,” he said.

Hoping to win over the ultra-religious Agudat Israel party, Shamir has pledged to pass laws banning advertising deemed indecent and the sale of pork, Israel radio said.

Without the four-member Agudat Israel faction, Shamir would have at most a wafer-thin 61-59 majority in the 120-seat Knesset (Parliament), making his government highly unstable.

The Labor-Likud unity government fell over Shamir’s refusal to accept a proposal from Secretary of State James A. Baker III for peace talks between Palestinians and Israelis.

In a related matter, Avi Pazner, Shamir’s media adviser, said Friday that Shamir had no advance knowledge of a widely criticized Jewish settlement in the Christian Quarter of Jerusalem’s walled Old City.

Pazner said the prime minister denied knowing that 150 settlers were planning to move into a hospice owned by the Greek Orthodox Church. He made the remarks during a briefing by Jerusalem Mayor Teddy Kollek, just back from Washington, on the damage the settlement had caused to Israeli-U.S. relations.

The settlers moved in last month, provoking a storm of criticism from Muslim and Christian Palestinians.

The government admitted underwriting the settlement after a leftist Knesset member exposed the official role.

However, Pazner said the first installment on the government’s $1.8-million contribution was paid in December, when Peres was finance minister.

Warning of the consequences of a right-wing Israeli government, Palestinian leaders vowed in a new leaflet Friday to step up the 29-month old Arab uprising in the Israeli-occupied West Bank and Gaza Strip.