If the two-state solution collapsed, he said, Israel would "face a South African-style struggle for equal voting rights, and as soon as that happens, the state of Israel is finished". Israel's supporters abroad would quickly turn against such a state, he said.

"The Jewish organisations, which were our power base in America, will be the first to come out against us because they will say they cannot support a state that does not support democracy and equal voting rights for all its residents," he said.

The Israeli government is usually bitterly resentful of any comparison to the apartheid regime but Olmert's remarks looked like an effort to galvanise support from a sceptical Israeli public for a return to peace negotiations with the Palestinians in the days after the Annapolis conference.

Israel has a 20% Arab minority who are citizens and can vote, although they are frequently discriminated against and are described by some as a "demographic threat". Within a few years the number of Arabs in Israel and the Palestinian territories is expected to equal, and then exceed, the number of Jews in Israel and the settlements. Some Palestinians argue that they should campaign for a so-called one-state solution: equal voting and citizenship rights within a larger country that includes Israel and the occupied territories and in which Palestinians will soon have a majority.

It is not the first time that Olmert has risked the South African comparison. Four years ago, in another interview with Ha'aretz, he gave a similar warning. But that was a time when, as deputy to the then prime minister Ariel Sharon, he argued that Israel should unilaterally draw up a border with the Palestinians, withdrawing from Gaza and holding on to the major Jewish settlement blocs in the West Bank.

He bluntly described his goal then as being "to maximise the number of Jews; to minimise the number of Palestinians; not to withdraw to the 1967 border and not to divide Jerusalem". But in the wake of Hamas's domination of Gaza and last year's war in Lebanon, unilateralism is discredited among Israelis, at least for now.

Olmert's warning yesterday came on the anniversary of the 1947 UN partition plan that would have divided British mandate Palestine into a Jewish and an Arab state. His words resonated across the political spectrum.

Israeli historian Tom Segev wrote in yesterday's Ha'aretz: "It is not easy to understand why so many Israelis still believe that a large Israel without peace is better than a small Israel with peace." Israel had most to lose, he said. "With every settler who moves to the territories and with every Palestinian child who is killed by Israel Defence Forces fire, Israel loses some of the moral justification that led to the decision on the November 29 60 years ago. The Palestinians have already lost almost everything they had."

Gerald Steinberg, chairman of the political science department at Israel's Bar-Ilan University, said Olmert's comments reflected a long-held belief. "The logic is precisely the same as the logic pursued by all Israeli governments since 1967: the realisation that you can't have a Jewish, democratic state and still control the lives of millions of Palestinians," he said.

He said it was still open to question whether the Annapolis negotiations would succeed. If they failed, the Israeli government might return to the idea of a unilateral withdrawal from most of the West Bank, but one that left the Israeli military deployed.