Israel's Prime Minister Benjamin Netanyahu 'strikes a coalition deal'

The new government will have the slimmest of majorities with 61 out of the parliament's 120 MPs

Benjamin Netanyahu has formed a right-wing coalition government (AFP/Getty Images)

Israeli Prime Minister Benjamin Netanyahu has agreed to form a new coalition government with a far-right ultranationalist party.

Jewish Home advocates annexation of parts of occupied territory that the Palestinians seek for their own nation state.

The coalition, which also includes United Torah Judaism, Shas and Kulanu, will have the slimmest of majorities with 61 out of the parliament’s 120 MPs.

The deal was reached two months after the election and just hours before a deadline after which the president would have had to ask someone else to try to form a government.

Mr Netanyahu, who has served as Prime Minister since 2009 and also had a spell in office in the 1990s, said: “I said before that 61 was a good number, but 61 plus is an even better number. There's still a lot of work left to all of us. Good luck to us and to the people of Israel.”

Jewish Home’s leader, Naftali Bennett, said: “Finally, there's a government in Israel. This isn't a right-wing government, it isn't a left-wing government, and it isn't a centre government. It's a government of the entire nation of Israel.

“I want to tell you, Mr Prime Minister, we are behind you. We will help and aid you for the success of the government under your leadership.”

The Jewish Home party is linked to the West Bank settler movement. It opposes peace moves toward the Palestinians and has pushed for increased settlement construction on occupied lands — a policy that is opposed by the US and European countries.

The Times of Israel reported that Mr Netanyahu had “caved in” to Jewish Homes’ demands, appointing Mr Bennett as education minister and another of its MPs, Ayelet Shaked, as justice minister.

Kulanu is a centrist party focused on economic issues with the other two coalition partners both ultra-Orthodox religious parties.

Additional reporting by Reuters