JERUSALEM - Hawkish Likud leader Benjamin Netanyahu on Thursday cleared a major hurdle in his bid to become Israel's prime minister as ultra-nationalist Avigdor Lieberman backed his bid to form a government.
But the former premier promptly hit a new snag as Foreign Minister Tzipi Livni made it clear her centrist Kadima party had no interest in joining a Likud-led coalition that includes Lieberman's far-right Yisrael Beitenu.
Netanyahu, popularly known as Bibi, can still count on the support of 65 of the 120 members of parliament, but would have to rely on parties to the right of his own despite his stated preference for a broad coalition, pundits said.
President Shimon Peres has asked Livni and Netanyahu to meet him separately on Friday in a bid to resolve their differences.
"I intend to make another attempt to convince the parties to cooperate in a bid to form a broad and stable government," he said in a statement.
Lieberman said earlier he favoured a Likud-led alliance with Kadima and his Yisrael Beitenu party.
"We recommend Bibi Netanyahu, but only as part of a wider government," Lieberman told Peres who was meeting parliamentary factions before deciding who he will ask to form a new government.
"To govern the country, we need a government with the three largest parties," said Lieberman, a Soviet immigrant whose party displaced Labour as the third largest parliamentary faction in the February 10 election.
"Those that want to join (the coalition) can do so later," Lieberman added.
But Livni dismissed the proposal.
"Today, the bases of a far-right government led by Netanyahu have been set," she told Kadima members.
"We have not been elected to give legitimacy to this extreme right-wing government, and will head to the opposition."
She insisted she had no interest in supporting "a paralysed government."
"Kadima and I will continue on the track we have taken to push forward the peace process and fight against terrorism."
Lieberman, on the other hand, said he did not consider the Middle East peace talks the most pressing issue for Israel.
"The Israeli-Palestinian conflict is not a priority," he said in a speech expected to raise further concerns over the future of the already hobbled process.
"Our biggest threat comes from Iran, with its nuclear programme and its proxies like Hamas and Hezbollah," Lieberman said at a conference of US Jewish organisations in Jerusalem.
Peres met with Likud and Kadima representatives on Wednesday and held talks with the other 10 factions on Thursday.
Kadima had suggested a power-sharing deal with Netanyahu similar to the one Israel had in 1984 after another close ballot, when the two leading parties each held the post of prime minister for two years.
But Lieberman said that "Livni must give up the idea of a rotation as such a solution would cause instability."
Netanyahu has also rejected a rotating premiership.
Kadima won 28 parliamentary seats in the election, just one more than Likud, but has far fewer potential coalition allies than its right-wing rival.
Under Israeli law, the task of forming a government does not automatically go to the party that wins the most votes but to the one most likely to form a majority coalition.
Right-wing parties made dramatic gains overall in the election, which was held in the wake of Israel's deadly 22-day offensive on the Hamas-ruled Gaza Strip and was dominated by security concerns.
Peres will announce his decision on Sunday or Monday, his spokeswoman Ayelet Frish said.
The Kadima delegation on Wednesday pressed the president, who is himself drawn from Livni's centrist faction, to give it first go at trying to forge a governing coalition, but Likud insisted that Netanyahu was better placed to lead a new government.
The person tasked by Peres to form a government will have 28 days to put together a coalition. If necessary Peres can extend the deadline by 14 days.
The election was called after Prime Minister Ehud Olmert handed in his resignation in September after being questioned by police over a series of graft allegations. He has stayed on as acting premier.