Livni, who sounded sure of herself and of her decision, said Saturday night that "I decided not to give in, and this is what the president will hear from me."
The foreign minister made her decision following a long evening of hectic consultations at her home, during which all her options were raised. After hours of discussions with the Knesset factions which were slated to join her coalition, it became clear that a compromise could not be reached in the negotiations.
"I've had enough of extortion," Livni told her associates. "Tomorrow I will declare elections."
The Kadima chairwoman said that throughout the coalition negotiations the factions had demanded billions of shekels, as well as her commitment not to discuss Jerusalem's status in the peace negotiations with the Palestinians.
"There are things the State cannot be sold for," she told Ynet.
'I won’t accept diplomatic paralysis'
The turning point in the coalition talks was Shas' decision not to join a Livni-led government. The Kadima chairwoman also received "a cold shoulder" from the Pensioners Party.
According to Livni, "There are demands which are unreasonable, even in a situation in which attempts are being made to form a government."
She rejected the claim that she should have continued the negotiations until the last day given to her by law.
"Why play for time?" she asked. "Play for time so that the public wakes up in the morning and hears that another party received billions and that we have entered a diplomatic paralysis? I won't accept that."
The foreign minister is certain she made the right move. "Time only creates more demands," she said. "When everyone thinks that it all depends on their vote only, everyone sends something else into the air."
She added, "My responsibility now is not to give in to a situation in which each person presents impossible demands. These demands came from all directions. I made appropriate offers, I was willing to give to the disadvantaged population, and I'm at peace with this. I'm at peace with the fact that the weak received additional funds, but there are some things that cannot be granted."
Livni went on to say that she opposed the demands to freeze the diplomatic negotiations or to block them because of a commitment not to discuss Jerusalem.
"They want to halt the diplomatic negotiations," the Kadima chairwoman said. "I won't accept that. I have a responsibility towards this country."
Asked whether she fears losing the elections, Livni replied, "I'm going to win these elections."