* Parliament set to vote on dissolution, March 2 election
* Efforts to form "national unity" government deadlocked
* Israel held inconclusive elections in April, September
By Jeffrey Heller
JERUSALEM, Dec 11 (Reuters) - Israel headed on Wednesday towards a third national election in less than a year with Prime Minister Benjamin Netanyahu facing the fight of his life for political survival after a criminal indictment.
After giving its preliminary approval, and barring last-minute progress in deadlocked efforts to form a new government, parliament was set to vote for its dissolution later in the day and approve a March 2 election date already agreed by the two major parties.
What had once seemed nearly impossible to many Israelis - a third visit to polling stations after inconclusive elections in April and September - carries a heavy economic price: it will be well into 2020 before a new budget is passed, which will mean months of cutbacks that will weigh on growth.
Neither Netanyahu's right-wing Likud party nor the centrist Blue and White party led by his main rival, former military chief Benny Gantz, won enough seats in the Knesset (parliament) for a governing majority in the previous two contests.
Both men were delegated the task of forming a coalition, but failed. Each has blamed the other for the impasse, in which neither could agree on the terms for a "rotating" premiership.
In the two previous national ballots, Netanyahu's opponents focused on the three corruption investigations against him that included allegations he dispensed favours to media barons in a push for more favourable media coverage.
But this time, Israel's longest-serving leader is running under the cloud of criminal indictment after charges of bribery, breach of trust and fraud against him were announced last month.
Denying any wrongdoing, Netanyahu, 70, has accused legal authorities of attempting a "coup" aimed at ousting a popular right-wing leader. Critics alleged that Netanyahu was trying to undermine the rule of law and set an election campaign theme portraying himself as the victim of "deep state" conspiracy.
As prime minister, Netanyahu is under no legal obligation to resign as a result of the indictment, and while in office he can ask the legislature to grant him immunity from prosecution.
As caretaker premier, Netanyahu would remain in the post until a new government is formed - a process that could stretch months past a March ballot if what is likely to be tortuous coalition-building is taken into account.
"The entire country is held hostage by the prime minister's legal battles," the left-wing Haaretz newspaper said in an editorial on Wednesday.
Netanyahu, vowing to "win big" at the polls, has described himself as best-placed to deal with Israel's many security threats. He has citing challenges posed by arch-enemy Iran as a main reason why Gantz should rally to his call for a unity government.
An opinion poll on Israel's Channel 13 news on Tuesday forecast Blue and White would win 37 seats to Likud's 33 in the 120-member parliament, increasing the one-seat advantage it gained in the election in April.
But it also indicated that both parties could still struggle to secure enough allies for a majority coalition. (Editing by Mark Heinrich)
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