Israel PM Netanyahu signs coalition deal

Benjamin Netanyahu has struggled to form a new coalition government

Israeli Prime Minister Benjamin Netanyahu has reached a deal to form a new coalition government.

His Likud-Yisrael Beitenu alliance signed the agreement with the centrist Yesh Atid and the pro-settler Jewish Home, the parties in the coalition say.

It is the first time in a decade that an Israeli coalition government will not include any ultra-Orthodox groups.

The deal follows weeks of deadlock since Mr Netanyahu's election win on 22 January.

It comes a day before a deadline passes for Mr Netanyahu to legally form a coalition.

"The prime minister welcomes the coalition agreements that have been signed between the Likud and Yisrael Beitenu (on one side) and the Yesh Atid party and the Jewish Home," a statement from Mr Netanyahu's office said.

"On Saturday evening, the prime minister will inform President Shimon Peres that he has completed the task" of forming a government.

The government is expected to sworn in on Monday, two days before a visit by the United States President Barack Obama.

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Yesh Atid and Jewish Home stuck to a pact in coalition talks with Mr Netanyahu

According to Israeli media reports, there will be 22 ministers, making it the smallest government in decades.

Likud will reportedly run the interior ministry, while Yesh Atid has secured five portfolios - including finance and education - and Jewish Home will have three.

In the new cabinet, it is believed Yair Lapid - a former TV presenter who leads Yesh Atid - will be finance minister and Jewish Home's Naftali Bennett, a high-tech millionaire, will be economic and trade minister.

After tough negotiations, it was apparently decided that Mr Lapid's deputy, Rabbi Shai Piron would take the education portfolio while Likud would have the interior ministry, our correspondent says.

Mr Netanyahu is expected to act as foreign minister while Avigdor Lieberman, who leads his partner Yisrael Beitenu, faces charges of fraud and breach of trust in a trial.

The defence ministry will be headed by former IDF chief of staff, Moshe Yaalon, a Likud member.

Tzipi Livni, whose Hatnua party holds six seats, will be justice minister and chief negotiator in talks with the Palestinians.

In total Mr Netanyahu will control 68 Knesset seats.

The opposition will consist of Labour, the third-biggest party in the parliament with 15 seats, the ultra-Orthodox and Arab parties and centrist Kadima.

One of the first challenges for the new government will be passing the 2013 budget which will include austerity measures, our correspondent says.

Mr Netanyahu called for an early election last October because he said bickering among his coalition partners made it impossible to pass a "responsible budget".

During the drawn-out coalition talks, Mr Lapid and Mr Bennett formed a pact and got commitments to a new draft law that will compel more ultra-Orthodox men to perform national military service or other civilian duties.

Sharing the "social burden", as it is known, was a contentious issue in the election.

Many secular Israelis object to the exemptions from army service given to students at religious seminaries or yeshivas and to the large state subsidies that their institutions receive.