Binyamin "Bibi" Netanyahu was with his sons at a football match on Wednesday night when a tearful Ehud Olmert announced he would be stepping down as leader of his Kadima party after months of battling corruption allegations. But his mind may have wandered: for whatever happens next, Netanyahu - once the enfant terrible of Israeli politics and one of its most fascinating and controversial figures - stands to gain.

As the implications sink in of Olmert's decision - for Israel, the Palestinians and the wider Middle East - opinion polls show that the leader of the right-wing Likud opposition remains the Israeli public's preferred choice as prime minister.

"Bibi is likely to be prime minister after the next elections," predicts the journalist Haim Baram, combining "gut feeling" with decades of writing about Israel's febrile, fragmented political life. And given that this is a part of the world where worst-case scenarios tend to come true, the looming crisis over Iran's nuclear ambitions could galvanise squabbling politicians to close ranks and go for a grand national unity coalition: cue Netanyahu.

No wonder his immediate response was to call for early elections - the instinct of a quick-witted politician who seizes on disarray in the enemy camp and senses that his time come. "This government has reached an end and it doesn't matter who heads Kadima. They are all partners in this government's total failure," he declared on Thursday. "If Bibi sees he can precipitate elections, he will," says the political analyst Yossi Alpher. "But it's impossible to predict what's going to happen. There are too many variables."

Two surveys published yesterday forecast a Likud victory over Kadima, though Netanyahu would have a tougher time if the current foreign minister and aspiring Kadima leader, Tzipi Livni, beats her rival, the hawkish Shaul Mofaz. Ehud Barak, the Labour party leader and defence minister, is languishing with just 12%.

Uzi Arad, a former Mossad executive who advises Netanyahu on foreign and security policy, talks too of "imponderables and uncertainties". But Netanyahu, he argues, "has a prime ministerial aura and experience in executive positions - precisely what Livni lacks". The Likud leader is a "sober, hard-nosed realist" who has consistently opposed the current Annapolis peace talks with the Palestinians and insists on retaining Jewish settlements all over "Judea and Samaria" (the biblical Hebrew names for the West Bank) - a position that is simply not compatible with creating a viable Palestinian state.

Hardline views

Netanyahu's hardline views on the Palestinians have barely changed since he first entered public life in the early 1980s. In 1996, when he became the country's youngest prime minister (and the first who was born after the state was created in 1948) he vowed to chip away at the Oslo accords, which were agreed between Yizthak Rabin and Yasser Arafat and broke Israel's historic taboo on dealing with the PLO. It was Rabin's murder by a Jewish extremist, the fatal indecision of the Labour veteran Shimon Peres and a devastating series of Hamas and Islamic Jihad suicide bombings in Jerusalem and Tel Aviv that swept the Likud to power.

Few of those who dealt with Netanyahu the prime minister have warm memories of him. "Who the fuck does he think he is, who's the fucking superpower here?" an outraged Bill Clinton asked his aides after his first meeting with the new Israeli leader. A former diplomat remembers him as being "bumptious and over-confident" when he snubbed Robin Cook, Britain's foreign secretary, after a high-profile visit to the site of a Jewish settlement being planned in Arab East Jerusalem.

In 1997 Netanyahu did reluctantly agree to withdraw from the West Bank city of Hebron (though an enclave of fanatical Jewish settlers remain there, over a decade later), but generally he was seen "as a kind of speed bump that would have to be negotiated until a new Israeli prime minister came along who was more serious about peace," recalled Clinton's adviser Aaron David Miller.

For Marwan Muasher, Jordan's ambassador to Israel, Netanyahu's most striking quality was arrogance coupled with an alarming tendency to spout the old Likud idea that Jordan should oppose Palestinian independence. And the premier got into deep water when Mossad agents tried and failed to assassinate the Hamas leader Khaled Meshal in Amman by injecting poison into his ear. King Hussein threatened to storm the Israeli embassy unless Netanyahu backed down and supplied the antidote to save the Palestinan's life.

Yet like him or loathe him, Netanyahu has always been a slick communicator. The onetime furniture salesman performed well - in fluent American English - as Israel's ambassador to the UN and spoke for his country during the 1991 Gulf War, when Saddam Hussein's Scud missiles hit Israel. He once donned a gas mask on screen - a brilliant piece of showmanship. Muasher thought him a "savvy politician, mindful of the sound bite and always ready to use it. He tended to impress and befriend his interlocutors, often by stretching or hiding part of the truth."

Interestingly, Netanyahu gets on well with Tony Blair, now the Quartet envoy working on Palestinian economic development. "Netanyahu believes that the economic sphere is one where we can make quick, tangible progress, create more jobs and generate growth," said Arad. "That may yield the kind of political payoffs that could further political negotiations". But what there is to negotiate about is less than clear. Netanyahu resigned over Ariel Sharon's 2005 unilateral withdrawal from Gaza. And he is sharply focused on Jerusalem's Temple Mount - "the most explosive square kilometre on earth," and the danger that the city "will become a Mecca for the world's terrorists".

Iran

Terrorism has been an obsession ever since his older brother, Yoni, was killed leading Israeli commandos to free hostages at Uganda's Entebbe Airport in 1976. Netanyahu claims to have predicted the 2001 attacks on the World Trade Centre and has been quoted as saying that 9/11 was "good for Israel".

He sees Iran as the major problem facing Israel and the world today. "It's 1938," he told CNN last year, "and Iran is Germany". Hamas, and Hizbullah in Lebanon, he argues, are Iranian "proxies". And until the Islamic Republic is contained, there can be no progress with the Palestinians. Haim Baram, a trenchant critic from the left, agrees that a possible Israeli attack on Iran is the big question. "But Bibi may in fact be more sane on this issue than Mofaz or Barak," he suggests.

Netanyahu, famously described as "the senator for Israel," has met both Barack Obama and John McCain, though his popularity in the US is on the Republican right and with Christian groups that automatically back Israel, right or wrong.

During a stint as finance minister under Sharon, he won both plaudits and brickbats for pushing through Thatcherite-style market reforms that boosted growth - and inequality. But it is on the enduring core issues of war, peace, borders and territory that he will be judged by voters when the time comes. "Israelis have lost faith in peace," says Ha'aretz commentator Tom Segev. "They don't believe in it any more. People will vote for Bibi because they say 'if there is no peace, we might as well have a strong leader'."

CV

1949 Born in Tel Aviv

1963 Moves to US with his parents

1967-73 Serves in Israeli army as soldier and commando captain

1976 Brother Yonatan killed leading Entebbe rescue mission.

1982 Joins Israeli foreign ministry

1984 Becomes Israel's ambassador to UN

1988 Enters Knesset as Likud MP and joins cabinet

1993 Becomes Likud party leader. Opposes Yitzhak Rabin's Oslo agreement with PLO

1996 Becomes prime minister

1999 Loses election to Labour's Ehud Barak and retires temporarily from politics

2002-3 Serves as foreign minister under Ariel Sharon

Feb 2003 - Aug 2005 Serves as finance minister but resigns over Sharon's unilateral withdrawal from the Gaza Strip. Sharon quits Likud to form Kadima

Dec 2005 Becomes Likud leader again

March 2006 Knesset elections. Likud under Netanyahu takes third place behind Kadima and Labour