Benjamin Netanyahu, former foreign minister Livni announce coalition deal

Livni, whose six-seat centrist The Movement is the first party to agree to join a Netanyahu-led coalition, would be responsible for peace talks with the Palestinians in the new government. She would also serve as minister of justice.

Netanyahu told a joint news conference in Jerusalem that he and Livni would work to promote the vision of an Israeli state and a Palestinian state existing side by side.

He called for other parties to join as broad-based a coalition as possible. This would allow a new government to deal with external challenges facing Israel - such as Iran's drive for nuclear weapons - and internal ones - such as equalizing the obligations borne by Israeli citizens and lowering the cost of living.

Livni, whose party was the only one during the recent election campaign to make the peace process with the Palestinians the top issue, said that "the reality is that the Palestinian issue is part of our lives."

She called on other parties which wanted to promote the peace process to join the coalition.

Netanyahu's Likud-Beteinu Alliance emerged from January 22 elections as the largest faction in the 120-seat parliament, with 31 mandates. The addition of Livni's party means the premier is still 24 seats short of forming a majority coalition.

Netanyahu was tasked by President Shimon Peres with forming the next government. But nearly three weeks of coalition talks have, so far, come to naught, with prospective coalition partners refusing to moderate their demands.

He has until March 2 to form a government, but can ask for a 14-day extension if required.