The political infighting came as Israel pressed ahead with a large-scale offensive against Palestinian militants.
Israeli aircraft fired missiles into Gaza and troops arrested dozens of militants in the West Bank. Defense Minister Shaul Mofaz said Israel would renew its policy of pinpoint killings of militants and branded a militant leader's call for a halt to rocket attacks on Israel as inadequate.
"We will continue to respond to terror from Gaza with an iron fist," Mofaz said.
Hamas said the arrests were motivated by a desire to weaken the group ahead of Palestinian legislative elections scheduled for January.
Sharon's 104-vote margin in Monday's vote by the 3,000-member Likud central committee was a blow to party hard-liners who wanted to punish him for his pullout from the Gaza Strip. Sharon's main party rival, former Prime Minister Benjamin Netanyahu, said committee members caved in to the pressure of a "tyrant," without mentioning Sharon by name.
Sharon aides had said the premier might leave the party, call early elections and run as the head of a new centrist party if he lost the vote.
The victory is a coup for Sharon, who has proven time and again that he is a political survivor, reports CBS News Correspondent Robert Berger.
The ballot was ostensibly over a procedural issue: whether to hold elections for party leader in April, as scheduled, or move up the primary to November. Both Sharon and Netanyahu said the ballot amounted to a vote of confidence in the prime minister, who has expressed hope the Gaza pullout would spark peace talks that would ultimately lead to the creation of a Palestinian state.
Sharon did not immediately react to the vote, but Lior Horev, his political adviser, said the victory would buy Sharon time to decide his future. If Likud decides to back his major policies, he will stay; if it doesn't, he will leave, Horev said.
"Either the party stands behind him or he has to choose a different way in order to push forward his agenda," Horev said.