Prime Minister Benjamin Netanyahu looked set on Thursday to form the most right-wing government in Israeli history, with Avigdor Lieberman, a hardliner loathed by Palestinians, expected to become defence minister.
Netanyahu aides were in talks with officials of Lieberman's hawkish Yisrael Beitenu party on terms for its entry to the ruling coalition, which would boost its currently wafer-thin majority in parliament.
Leaks to the Israeli media from both sides said a deal was close to being finalised.
Yisrael Beitenu held six of the 120 places in parliament, but following news of the coalition deal MP Orly Levi-Abekasis said on Facebook that she was quitting the party but would retain her Knesset seat, to work on social-economic issues "according to the dictates of my conscience."
Even with five seats, Yisrael Beitenu's entry into government would be a major boost for Netanyahu, who has not concealed his ambition to expand on the coalition's current 61 seats.
The return of Lieberman, who served as foreign minister under Netanyahu from 2009 to 2012 and again from 2013 to 2015, could raise international concern about his government's policies -- especially on the conflict with the Palestinians.
As defence minister, Lieberman, who himself lives in a Jewish settlement in the occupied West Bank, would oversee military operations in the Palestinian territories and have a major say in policy towards the settlements.
The international community considers the settlements illegal and regards their persistent expansion by successive Netanyahu governments as one of the biggest obstacles to peace.
Since its formation in May 2015, Lieberman had repeatedly branded the current five-party coalition as "defeatist" but on Wednesday he told a news conference that he would be open to joining it if key demands were met.
He said one of them was the death penalty for perpetrators of anti-Israeli attacks and hinted that Netanyahu's government could accede to that demand.
Lieberman has long expressed mistrust in Palestinian president Mahmud Abbas and called for his removal.
Just a month ago, he said that if he were defence minister, he would give Hamas's Gaza leader Ismail Haniya 48 hours to hand over detained Israeli civilians and the bodies of soldiers killed in the 2014 Israeli offensive on the strip "or you're dead".
The Palestinian foreign ministry said on Thursday that should Lieberman join the government it would be good news for Israeli "settlers and ultra-extremists."
"The inclusion of Lieberman, known for his extreme rightwing (views) toward Palestinians, is new evidence that Netanyahu as usual prefers to promote extremism in his government," a statement said.
"The decision represents Netanyahu's response to French, international and regional efforts to revive the peace process between the two sides -- Palestinian and Israeli -- and sends a strong message to the world."
France is trying to revive moribund peace negotiations, frozen since April 2014, but Israel has rejected the idea of an international peace conference -- instead pushing for direct bilateral talks.
The government's embrace of Lieberman comes after weeks of negotiations, not just with Yisrael Beitenu but also with the centre left.
Netanyahu had been widely expected to make a deal with the leader of the opposition Labour party, Isaac Herzog.
Months of secret talks between the two men made headlines in recent days, with Herzog tipped for foreign minister ahead of a French-led push for renewed peace talks this summer.
But Netanyahu's 11th-hour tilt to the far right appeared to jeopardise those hopes, drawing criticism from some newspapers.
"Instead of presenting to the world, in advance of the serious diplomatic challenges that lie ahead of us in the autumn, a more moderate government, Netanyahu is presenting to the world the most extreme government ever to have served here," the centrist Yediot Aharonot newspaper said.
Mtanes Shihadeh, Israeli studies professor at Birzeit University in the West Bank, said most Palestinians didn't see much difference between Lieberman and other Israeli politicians.
"Even if Labour joins (the government), maybe there would be some kind of slowing down in settlement building, but the core issues will not change."
The right-wing Maariv newspaper agreed that Israel was about to get the "most right-wing and most extremist government since the founding of the state".
Lieberman's appointment to the defence ministry in place of former armed forces chief of staff Moshe Yaalon is also likely to raise the hackles of senior commanders.
Yaalon had been at loggerheads with Netanyahu over his insistence that senior officers be encouraged to "speak their mind."
*This story was edited by Ahram Online.