* Barak led Israel from 1999 to 2001
* Announces new party ahead of Sept. 17 election
* Former general is part of centre-left
By Jeffrey Heller
JERUSALEM, June 26 (Reuters) - Former prime minister Ehud Barak announced on Wednesday a return to politics as the leader of a new party in Israel's coming national election, saying it was time to end Benjamin Netanyahu's "corrupt leadership".
The legislature dissolved itself last month and scheduled an election after Netanyahu, who heads the right-wing Likud, failed to form a governing coalition following a ballot in April in which no single party won a parliamentary majority.
Political commentators said a comeback for Barak, who once led the left-wing Labour Party, could fragment Israel's centre-left and harm the chances of Netanyahu's strongest challenger, Benny Gantz of the Blue and White party, unseating him in the Sept. 17 poll.
"We came here today to comment on what is going on around us and announce the establishment of a new party," Barak, 77, told a news conference. He did not say what it would be called, and hinted at a possible alliance with centrist and left-wing parties to defeat Likud.
"This is not time to be on the fence... Netanyahu's regime, with its radical messianic zealots and its corrupt leadership must be toppled," Barak said, in a reference to the prime minister's far-right religious allies.
In office for the past decade, Netanyahu faces a pre-trial hearing in October with Israel's attorney-general, who has announced his intention to indict him on fraud and bribery charges stemming from three corruption investigations.
Netanyahu, 69, had denied any wrongdoing and says he is a victim of a political witch-hunt.
"Bibi, the time has come - your last chance to go home of your own free will," Barak said at the news conference, using Netanyahu's nickname in an apparent suggestion that he step down.
An opinion poll broadcast on Channel 12 TV after Barak's announcement forecast his party would win six of parliament's 120 seats.
A former armed forces chief and Israel's most decorated soldier, Barak was prime minister from 1999 to 2001, a period in which he held unsuccessful peace talks with the Palestinians and Syria.
He served as defence minister from 2007 until leaving politics for the business world in 2013, first in former Prime Minister Ehud Olmert's government and then in Netanyahu's administration.
As a private citizen, Barak has been involved in ventures in cyber security, emergency rescue technology and medical marijuana. He has been especially vocal on social media in attacking Netanyahu, whom he once commanded in an elite commando unit.
(editing by John Stonestreet)
Our Standards: The Thomson Reuters Trust Principles.