JERUSALEM — Israeli Finance Minister Benjamin Netanyahu resigned yesterday in protest over Israel's planned withdrawal from the Gaza Strip, as the Cabinet gave the go-ahead for the first stage of the pullout, slated to begin next week.

The resignation positioned Netanyahu to challenge Prime Minister Ariel Sharon, his main political rival, in a future contest for leadership of the Likud Party, but it did not disrupt preparations for the withdrawal.

After Netanyahu submitted a letter of resignation at the weekly Cabinet meeting, ministers voted 17-5 to authorize the first stage of the Gaza pullout: the evacuation of the isolated Israeli settlements of Netzarim, Kfar Darom and Morag.

Settlers will be ordered to leave Aug. 15, and forcible eviction of those who remain is slated to begin two days later.

"Today we have reached the moment of truth," Netanyahu wrote in his letter. "There is a way to achieve peace and security. Unilateral withdrawal under fire, with nothing in return, is not the way."

He added: "I am not prepared to participate in a move that ignores reality and advances blindly toward the establishment of an Islamic terrorist base that will threaten the state. I am not prepared to participate in a move that endangers the security of Israel, divides the nation, entrenches the principle of returning to the 1967 lines, and which in the future will endanger the unity of Jerusalem."

Israel is planning to evacuate all 21 settlements and the troops protecting them from the Gaza Strip and to dismantle four more settlements in the northern West Bank, removing about 9,000 settlers from their homes. The Gaza Strip, the West Bank and East Jerusalem were captured by Israel in the 1967 Middle East war.

He added that although he had been contemplating resignation, he postponed the move until he had pushed through a series of economic reforms.

Critics of Netanyahu said his resignation had more to do with positioning himself firmly on Sharon's right flank in preparation for a struggle for the leadership of the Likud Party after the Gaza withdrawal.

Netanyahu, the critics said, was cultivating his role as a leader of the rightist camp disillusioned by Sharon's decision to uproot settlements.

"This was cynical, this was calculated, this was not moral," said Haim Ramon, a Cabinet minister from the Labor Party.

Yosef Joseph Lapid, leader of the opposition Shinui Party, said Netanyahu's resignation reflected a serious rift in the Likud that would force early elections after the Gaza withdrawal.

"The government has been substantially weakened in the long term, and there will be elections by the end of the year," Lapid said.

Sharon appointed a close ally, Vice Prime Minister Ehud Olmert, as interim finance minister, and vowed to carry on with the Gaza withdrawal.