Israel's two main political parties, Kadima and Labour, have agreed to form a power-sharing government committed to further withdrawals from the occupied territories and reviving Israel's welfare state. The Labour leader, Amir Peretz, said he had decided to join the administration, and will back the acting prime minister, Ehud Olmert, to remain in his position "out of national responsibility".In the coming days, the Israeli president, Moshe Katsav, is expected to formally invite Mr Olmert to form the next government. He then has up to 42 days to reach a coalition agreement with other parties to install a new administration.
Mr Olmert said he was prepared to invite any party into his government that backs his "consolidation plan" to draw Israel's final borders by 2010 using the West Bank barrier to mark out the frontier. It requires the dismantling of some smaller Jewish settlements, removing tens of thousands of Israelis living in the occupied territories, while annexing to Israel the larger settlement blocks that are home to about 350,000 people.