His political future becoming increasingly uncertain, Ehud Olmert was probed for a third time Friday on suspicions that he illegally accepted at least tens of thousands of US dollars in cash from an American fundraiser.

Police questioned Olmert for more than two hours at his Jerusalem residence Friday morning, Police Spokesman Micky Rosenfeld said, ahead of a crucial cross-examination of key state witness Morris Talansky by the premier's lawyers Thursday next week.

The spokesman would give no details, but Israeli media, quoting law enforcement sources who spoke on condition of anonymity because the investigation is confidential, said the detectives confronted the premier with new evidence gathered in the US.

The new material, they said, includes statements by witnesses who said they were present in the hotel rooms when Talansky, a Jewish fundraiser and businessman from Long Island, handed cash envelopes to Olmert, 62.

Talansky has turned against Olmert and become the key state witness in the case, giving his version of events in a pre-trial testimony to a Jerusalem court in late May.

He told that hearing that he gave Olmert some 150,000 dollars, much of it in cash because he was asked to do so, over a course of 15 years, when Olmert served as mayor of Jerusalem and as cabinet minister for the hardline Likud party.

Olmert has admitted to receiving several envelopes, but with hundreds of dollars only, not thousands or tens of thousands. His lawyers and spokesmen have said they were legitimate reimbursements of food and accommodation expenses, paid for by his hosts when invited to speak at events in the US.

The rest of the large sums of money he received from Talansky between 1992 and 2005 were donations, used for four election campaigns - when he ran for mayor of Jerusalem in 1993 and 1998 and for the Likud leadership in 1999 and 2002, Olmert has said. Money received in the years after the campaigns was used to retroactively cover debts from the campaigns.

Talansky has said he raised the money for ideological reasons, but that Olmert used much of it for private purposes, including a family vacation in Italy, upgrading flights from business to first class and covering hotel costs while on lobbying trips in the US.

Olmert's advisors said that during Friday's questioning the premier would counter some of the statements made by Talansky and prove them false.

Talansky has also said that he raised the money for Olmert 'purely of admiration' and that he 'never had any personal benefits from this relationship.'

But police are investigating whether a future tradeoff was expected in return for the donations. The Israeli Ma'ariv daily on Thursday printed letters written by Olmert, among others one to top Las Vegas real-estate mogul Sheldon Adelson dating November 2005, asking the addressees to consider the services of Talansky's company, Cooltech, which produces mini-bars for hotels.

The affair broke in early May, when the premier was first questioned on the suspicions, and has since cast serious doubt on Olmert's political future.

His largest coalition partner, the Labour Party, has forced Olmert to agree to holding early primaries in his own, centrist Kadima, which the party decided this week to hold in mid-September.

It is still unclear whether Olmert will run in the primaries, but an associate said this week that he realizes his chances are slim and that he is inclined not to do so.

His advisors however still hope that the cross-examination of Talansky by Olmert's lawyers on July 17, will change the negative perception of the premier and reduce the pressure on him to step down.

He has nevertheless promised to resign if the police investigation materializes into an indictment against him.

And a senior law enforcement official told Ma'ariv on Thursday that he was certain the case would result in an indictment. Even if prosecutors lacked sufficient evidence to back up the allegation of bribe-taking, the indictment could include fraud, breach of trust, money laundering and violation of Israel's party funding law, he said.

But State Prosecutor Moshe Lador told reporters before Talansky's May 27 court hearing that it was too early to know whether the case would develop into an indictment, and accused the Israeli media and law enforcement sources of 'irresponsible' and inaccurate statements.

Olmert's lawyers have reacted furiously to the constant leaking by law enforcement sources to the Israeli media.

The premier's closest confident, Vice Premier Haim Ramon, said that even if Olmert did not participate in the Kadima leadership contest, to be held between September 14-18, or lost, it was possible he could continue to govern at the head of a transition government until an agreed date for early elections next winter or spring.