A date is expected to be announced by Monday, paving the way for a campaign likely to be dominated by both the conflict with the Palestinians and the economy.
“We agreed on elections between the end of February and the end of March,” the newly elected Labour leader told journalists after a 30-minute meeting with Mr Sharon in Tel Aviv.
“We will set a date when the parliament meets on the dissolution bill,” added Mr Peretz.
The Labour leader has pledged to remove his party from government and met Mr Sharon armed with the resignation letters of Labour’s seven ministers.
Mr Peretz, who ousted veteran deputy premier Shimon Peres from the Labour leadership last week, wants elections as soon as possible.
Labour initially agreed to join the coalition in order to see through
Israel’s recent pullout from the Gaza Strip but Mr Peretz sees no point in propping up Mr Sharon’s right-wing Likud party any further.
Labour MP Ephraim Sneh would lead the centre-left party’s election campaign, added Mr Peretz, who conceded it was up to the prime minister to set a date for polls not otherwise due until November 2006.
Mr Peretz, 53, had tried to force Mr Sharon’s hand by saying that on Monday he and the National Religious Party would present a bill calling for parliament to be dissolved.
In an interview published Thursday, Mr Sharon also indicated he saw no point in dragging out the process.
“I did not think the elections should be moved up, but as soon as it became clear to me that the existing political establishment was coming apart, I reached the conclusion that the best thing for the country is to hold an election campaign as soon as possible,” Mr Sharon told the Yediot Aharonot daily.
“Instant elections. Not in May, not in March. If possible, we will go to the people in February.”
After his meeting with Mr Peretz, the 77-year-old Mr Sharon also met Tommy Lapid, the leader of the largest opposition party Shinui.
Mr Lapid told reporters that Mr Sharon indicated a March election was on the cards.
“On the one hand, we want to shorten the process, but on the other, we have to give time to prepare for elections, and so we agreed they would be in March,” Mr Lapid said.
Although Mr Sharon made no comment after his meetings with Mr Peretz and Mr Lapid, he had told Yediot an early ballot would prevent “diplomatic stalemate”.
“We must ensure that 2006 does not become a lost year with regard to the peace process and the effort to reach an arrangement with the Palestinians.”
Mr Peretz is considered a “dove” on the question of peace and recently proposed a law that would encourage Jewish settlers to leave the occupied West Bank.
Mr Sharon says he has no plans for more withdrawals from the West Bank after overseeing the pullout from Gaza and four remote settlements in the north of the West Bank, a process completed in September.
Commentators believe Mr Sharon will try to paint Mr Peretz as “soft” on security and politically to the left of Amram Mitzna, who led Labour to a crushing defeat in 2003.
“He will be very tough on Peretz and try to portray him as something akin to Amram Mitzna, saying he is naive and totally inexperienced,” said Yossi Alpher, who served as an advisor to former Labour premier Ehud Barak.
Mr Peretz, a trade union leader, will try to capitalise on unhappiness over the state of the economy and poverty levels.
Recent polls give a Sharon-led Likud a substantial lead over Labour, and the right-wing party appears to be tightening ranks after months of bickering.
Sharon aides are reportedly moving away from the prospect that he may have to break away from Likud and form a new party, as surveys show the premier as frontrunner in any party leadership vote over chief rival Benjamin Netanyahu.
Mr Sharon must be confirmed by Likud’s central committee as the head of the party list before polling day.