* Aryeh Deri joins Shas party's new leadership
* A former minister, Deri seen as a moderate on peace issues
* Israel holds parliamentary election on Jan 22
By Maayan Lubell
JERUSALEM, Oct 18 (Reuters) - An ultra-Orthodox party has brought back a popular former leader after a 13-year absence that included jail time, a move that could draw votes away from Prime Minister Benjamin Netanyahu in Israel's January election.
The religious Shas party announced late on Wednesday that Aryeh Deri, 53, had joined its new triple-headed leadership for the Jan. 22 national ballot that opinion polls predict will give Netanyahu a new governing mandate.
But Shas and Netanyahu's right-wing Likud both draw support from religious Jews of Middle Eastern descent, and Deri's return could steer votes away from the prime minister's party.
Known in Israel for his quick wit and charm, the soft-spoken Deri had a meteoric rise in Israeli politics. He was appointed interior minister in 1988, becoming Israel's youngest ever cabinet member at the age of 29.
Deri joined Yitzhak Rabin's government in 1992 and his party gave crucial backing to the late Labour leader when he sought parliamentary approval for the Oslo peace accord Israel signed with the Palestinians in 1993.
But Deri's downfall began soon after, when the Supreme Court ordered him to resign from the cabinet in 1993 over corruption charges. He stayed on as Shas leader until 1999 when he was sentenced to three years in prison for taking bribes.
Shas, which controls 11 of parliament's 120 seats, receives guidance from a 92-year-old sage, Rabbi Ovadia Yosef, who gave his blessing to the leadership deal that forces Interior Minister Eli Yishai to share power with the more dovish Deri.
A poll published by Israel's left-wing Haaretz newspaper on Thursday showed that Shas, if headed by Deri, would gain three more parliamentary seats in the snap election Netanyahu called after his government failed to agree on the 2013 state budget.
"(Deri) takes those votes from the Likud," Tel Aviv University's Camil Fuchs, who conducted the survey, told Army Radio.
A 2005 survey in top Israeli news website, YNet, named Deri the 58th "greatest Israeli" of all time in a list of 200 names, three places above Ehud Barak, the current defence minister.
Thursday's Haaretz poll said that if former Prime Minister Ehud Olmert decided to enter the race and formed an alliance with centrist parties, their new bloc would win 25 seats in the legislature compared with 24 for Likud.
But it also found that even if Likud came in second in the voting, Netanyahu would be able to put together a government with nationalist and religious parties, including Shas.
That equation could change if Shas, under Deri's co-leadership, moved toward the centre. In the past, Shas joined governments headed by right, left and centre parties in return for benefits for its core supporters, lower-income Israelis.
Olmert resigned as prime minister in 2008 over corruption allegations. Three months ago, he was acquitted of the most serious of the charges, opening the way for a comeback. Aides said he is considering running in the election, and he is widely expected to make his intentions known within days.
In Deri's case, the corruption allegations were ballot box gold for Shas, whose followers said he was a victim of discrimination by an "Ashkenazi elite", or Jews of European descent who had long dominated Israeli politics.
Shas won 17 parliamentary seats - its best showing ever - in the 1999 election that followed Deri's conviction.
Deri had largely stayed out of the spotlight since his release from prison on parole in 2002. Colleagues said he has been focusing on religious studies and charitable work, while maintaining close ties with leading secular politicians.
Last year, he announced he intended to run for office, saying he felt he could bring hope to Israelis.
Yishai said on Israel Radio on Thursday that "with God's help, Netanyahu will win". But Yishai did not rule out shifting Shas's alliances if the ballot ends differently.