The decision to hold the Likud primaries on 31 January emerged late on Sunday, in a move described by the Israeli press as a "political bombshell." "This decision was taken in light of the serious challenges which Israel is facing," party spokeswoman Noga Katz told AFP, saying a formal announcement would be made Monday.
Under the party's constitution, leadership primaries must be held up to six months before general elections, which are due to take place in 2013.
Netanyahu is expected to comfortably win re-election to the Likud leadership, and the move was widely seen by commentators as a bid to capitalise on his good standing in the wake of soldier Gilad Shalit's release and his dominance within the party.
Bringing forward the primaries would also allow him to exploit the weakness of the opposition Kadima party, whose leader Tzipi Livni is facing strong internal opposition, press commentators said.
Vice premier Silvan Shalom, who has said he would run in any leadership contest, is adamantly opposed to the plan to bring the vote forward, and is planning to take legal action to challenge the move, which his associates said was a violation of the party's constitution, press reports said.
The move will mean the leadership election taking place on the same date as the Likud Convention when the party's 120,000 members meet to vote for its representatives to various party institutions.
The last time Likud held a leadership contest was in August 2007 when the party was still in opposition.
At the time, Netanyahu won 73.2 per cent of the vote, while his extreme right-wing challenger Moshe Feiglin gained 23.4 per cent and a little-known third candidate, Danny Danon, took 3.4 per cent. Feiglin has already said he would run again for the party's leadership. Likud holds 27 seats in the 120-member parliament.