* Foreign minister to be indicted for fraud, breach of trust
* He denies wrongdoing, opposition call for him to resign
* Lieberman's party set to win Jan. 22 election (Adds details, background)
By Ari Rabinovitch
JERUSALEM, Dec 13 (Reuters) - Israeli Foreign Minister Avigdor Lieberman will be indicted for fraud and breach of trust, the Justice Ministry said on Thursday, less severe charges than were originally considered.
The announcement comes ahead of a Jan. 22 election which the right-wing party of Lieberman and Prime Minister Benjamin Netanyahu is predicted to win.
Lieberman has denied all wrongdoing but had said he would resign if indicted. He is expected to speak later on Thursday.
Lieberman's lawyers, citing legal precedents, said in a statement they did not believe the courts would force him to resign. Opposition parties called for him to step down.
Investigations into Lieberman, 54, were first opened in 2001 and spanned nine countries. The more serious allegations included money-laundering and bribery, but the Attorney-General said there was no chance of a conviction on those.
The indictment focuses on Lieberman's efforts to promote an Israeli diplomat who had leaked him privileged information about a police probe pertaining to Lieberman.
Netanyahu welcomed the decision not to press more serious charges and said in a statement he hoped Lieberman would "also prove his innocence in the single remaining issue".
'SERIOUS CONFLICT OF INTEREST'
A draft of the indictment passed on to parliament said Lieberman had acted in "a serious conflict of interest between his duties to the public as foreign minister ... and his personal feeling of commitment to (the diplomat) who had acted on his behalf in passing him secret information."
Shuki Lamberger, a senior state prosecutor, said it could take up to a month for the indictment to be officially served because Lieberman is protected by parliamentary immunity.
Former Israeli Prime Minister Ehud Olmert resigned in 2008 after being indicted for corruption, though he has since been acquitted of most of those charges.
An outspoken foreign minister and a powerful partner in Netanyahu's governing coalition, Lieberman is known for his nationalistic rhetoric, making it a key component of his election campaigning.
This week Lieberman angered the European Union by saying it did not sufficiently condemn calls from the Islamist group Hamas for Israel's destruction and likened this to Europe's failure to stop the Nazi genocide against Jews during World War Two.
The European Union foreign policy chief called the comments offensive and reiterated the bloc's commitment to Israel's security.
Born in Moldova, Lieberman, 54, immigrated to Israel in 1978. He became administrative head of the Likud party in 1993 and ran the prime minister's office from 1996 to 1997 during Netanyahu's first term.
Frustrated with coalition politics, he left and formed his own party Yisrael Beiteinu (Our Home is Israel) in 1999.
Lieberman has questioned the loyalties of Israel's 1.5 million Arab citizens, drawing accusations of racism but also a large electoral following beyond his Russian-speaking base.
He and Netanyahu recently merged their parties and opinion polls have shown them coasting to victory next month. (Additional reporting by Allyn Fisher-Ilan and Maayan Lubell; editing by Robert Woodward)