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JERUSALEM - The chief of Israel's armed forces has resigned over the military's failure to achieve its goals in last summer's war in Lebanon, increasing pressure on the prime minister and defence minister to also step aside.

The departure of Lt. Gen. Dan Halutz announced Wednesday followed the completion of dozens of military inquiries into the conduct of Israel's largest military operation since 1982. None of the inquiries concluded he should quit or be dismissed. But earlier this month he acknowledged widespread shortcomings.

A separate government investigation is still pending.

"For me, the word 'responsibility' is very significant," Halutz wrote in his resignation letter. "My concept of responsibility is what led me to remain in my position until this point, and to place this letter on your desk today."

Hezbollah legislator Hussein Haj Hassan said it was clear Halutz resigned because Israel was defeated in Lebanon. "There's no other interpretation," he told The Associated Press.

Halutz's resignation touched off new demands for Israel's wartime leaders, Prime Minister Ehud Olmert and Defence Minister Amir Peretz, to follow his example and quit their posts.

There was no immediate reaction from Olmert or Peretz to those calls.

Halutz stepped down at the end of an already turbulent day for Olmert. Hours earlier, the Justice Ministry ordered a criminal investigation into his role in the sale of Israel's second-largest bank before he became prime minister last year. Olmert himself will be questioned in the case, aides said Wednesday.

Troops, bereaved families and even members of Israel's tightly knit military elite have been calling for Halutz's head ever since the monthlong war against Lebanese Hezbollah guerrillas ended on Aug. 14.

Israel launched the full-scale assault just hours after Hezbollah captured two Israeli soldiers and killed three others in a July 12 cross-border raid.

At first Israelis were largely united against Hezbollah, but that solidarity collapsed after the fighting ended. Critics questioned whether Israel went too hastily to a war that failed to achieve its goals: recovering the captured soldiers and crushing Hezbollah.

More than 1,000 people were killed on both sides, most in Lebanon, according to U.N., Israeli and Lebanese officials. Lebanon says the majority of those were Lebanese civilians. UNICEF also says most of those killed were civilians, and about a third of them were children.

Israel estimates 600 Hezbollah fighters were killed, while the militant group says 250 of its fighters died.

Northern Israel, meanwhile, was nearly paralyzed by the nearly 4,000 rockets fired from Lebanon during the fighting, and 159 Israelis were killed, including 39 civilians.

Criticism of the military's preparedness and tactics swelled after the battles ended without a clear-cut Israeli victory. Questions about the wisdom of 11th-hour battles and reports of food and water shortages led to demands for inquiries into the war's conduct.

On Wednesday, Halutz met with senior officers, saying he would remain on the job until a successor is chosen. "I have no intention of packing up my desk and leaving in a rush. I intend to ensure an orderly transition for my replacement," he said.

Three leading candidates are deputy chief of staff Maj. Gen. Moshe Kaplinsky, who was dispatched to the Lebanon front to assume command during the war; Gabi Ashkenazi, a retired general and current director general of the Defence Ministry; and Maj. Gen. Benny Ganz, Israel's top field officer.

Halutz's decision comes ahead of the completion of the wide-ranging government probe into the war. That investigation, which is looking into the conduct of both military and political leaders, is expected to announce its conclusions in the coming weeks.

Opposition lawmaker Effie Eitam, a retired general, said Olmert and Peretz must not "absolve themselves of responsibility."

"The debacle focuses on the triumvirate of the prime minister, defence minister and chief of staff," Eitam told Army Radio.

Halutz isn't the first military chief to have his tenure abruptly end. Lt. Gen. David Elazar was forced to step down in 1974 after Egypt and Syria launched the 1973 Mideast war with a surprise attack on Israel.

The Lebanon war has cost two other generals their jobs -- the commander in charge of the unit attacked in the July 12 raid, and the head of the army's northern command during the war.

Halutz also fired a third general who publicly criticized the war and government policy.

Halutz, who began his military career as a legendary fighter pilot, was chief of staff for less than two years, having assumed the post on June 1, 2005. He was the first air force chief to have commanded the military.

But he was a controversial figure in some quarters even before he took over as military commander.

Complaints have been filed against him abroad in connection with his decision, as air force commander, to drop a one-ton bomb on a Gaza Strip home in a 2002 airstrike that killed a Palestinian militant leader and 14 others, including nine children.

His tenure also was marred by other military setbacks, including an errant artillery attack that killed 19 civilians in the Gaza Strip and a failure to halt ongoing rocket attacks from Gaza.