Israeli Prime Minister Benjamin Netanyahu on Wednesday welcomed the acquittal of Avigdor Lieberman on corruption charges and hailed his anticipated return to government as foreign minister.

"I congratulate you on your unanimous acquittal and am happy about your returning to the government so that we can continue working together for the good of Israel," Netanyahu said in a statement.

The head of the hardline nationalist Yisrael Beitenu party, who resigned as foreign minister in December 2012, can now return to his cabinet post immediately, unless the attorney general decides to file an appeal.

The stocky 55-year-old former nightclub bouncer was accused of rewarding Israeli diplomat Zeev Ben Aryeh with an embassy posting in Latvia after he tipped him off about a police probe into his affairs.

But the judges ruled that this did not constitute a criminal offence.

The ruling is a watershed in the political career of a man who holds a key position in Israel's governing coalition, which is jointly led by an alliance of Netanyahu's rightwing Likud and Lieberman's Yisrael Beitenu.

But the reintroduction of the tough-talking Lieberman to the heart of coalition politics could also have implications for US-brokered peace talks between Israel and the Palestinians, which began in late July after a nearly three-year hiatus.

Lieberman has a long history of making incendiary anti-Arab remarks and has often shown open disdain for Palestinian president Mahmud Abbas, calling him a "diplomatic terrorist" and an obstacle to peace.