The former Israeli foreign minister, Tzipi Livni, has announced her return to politics, telling supporters she is forming a new party to run in January's parliamentary elections on a platform promising an aggressive push for peace with the Palestinians.

Livni, who served as Israel's foreign minister and chief peace negotiator from 2006-09, bitterly attacked the prime minister, Binyamin Netanyahu, as she announced the formation of her new party, called the Movement.

"I came to fight for peace … and I won't allow anyone to turn peace into a bad word," she said.

Her announcement brought a new, high-profile voice to the campaign to oust Netanyahu's hardline government. But with his Likud party leading in opinion polls and the dovish opposition divided between several parties, her candidacy did not immediately appear to pose a threat to the prime minister.

During Netanyahu's four years in power, peace talks with the western-backed Palestinian government of President Mahmoud Abbas have remained frozen.

Frustrated with the impasse, Abbas is heading to the United Nations this week to seek upgraded observer status for his people. Israel opposes this, saying Palestinian independence can only come through negotiations.

At the same time, Israel has entered indirect, Egypt-mediated negotiations with Abbas's rival, the Islamist militant Hamas movement, as part of a ceasefire deal that ended an eight-day Israeli military offensive in Hamas's Gaza stronghold last week.

"Everything is upside down: a government that negotiates with terrorists and freezes all dialogue with those who work to prevent attacks, the opposite message that is needed in the tough neighbourhood we live in," Livni said.

During her term as foreign minister, Livni forged a strong relationship with her American counterpart, Condoleezza Rice, as well as the Palestinians.

But she has stumbled as a politician. Livni assumed leadership of the centrist Kadima party in 2009 elections after the then prime minister, Ehud Olmert, was forced to resign because of a corruption scandal.

While Kadima won the most parliamentary seats in that election, Livni was unable to form a majority coalition and confined to the opposition. Kadima has steadily lost support, and early this year she was ousted as party leader. Recent polls have forecast that Kadima may not win a single seat in parliament in the 22 January vote.

Livni said she had not decided who would join her on her party list. One key question is whether Olmert, who was recently cleared of serious corruption charges, will join her.

She said she hoped Olmert would return to politics. But with Olmert still on the sidelines, Livni said she had decided to enter the race "because the field remained empty". Olmert's office said only that he had not decided whether to enter the race or support Livni.

Livni, 54, joins a field that includes the centrist Labor party, led by the former journalist Shelly Yachimovich, and the centrist Yesh Atid, led by the former anchorman Yair Lapid. While similar in ideology, these rival parties have focused their agendas largely on domestic and economic issues.

"I decided to give an answer to people who don't have anyone to vote for," Livni said. "This party will return this hope that was lost."

Livni's announcement on Tuesday was the latest move to shake the Israeli election campaign. On Monday, the defence minister, Ehud Barak, announced his retirement from politics with his tiny Independence Faction struggling in the polls.