Kingmaker Lieberman gives his backing to Netanyahu

Right-winger now clear favourite in race to become Israel's next prime minister

(AP)

Benjamin Netanyahu became the clear favourite yesterday to be the next prime minister of Israel after the pivotal right-wing nationalist party leader Avigdor Lieberman recommended that the Likud leader be asked to form a government.

But Mr Netanyahu may confront a difficult choice over whether to become resigned to heading a narrow right-wing government, or to offer substantial concessions to his main rival, Kadima leader Tzipi Livni, in the hope of enticing her to join a broader "unity" administration.

Mr Lieberman, leader of Yisrael Beiteinu, confounded Kadima's hopes that he might decline to choose between the two leaders when he recommended to the Israeli President Shimon Peres that he ask Mr Netanyahu to form a government. Mr Peres will hold talks with both leaders today, and is likely to announce his formal decision tomorrow night or on Sunday.

With Mr Netanyahu now commanding a clear, 65-strong right-wing majority, Ms Livni immediately staked out what at the very minimum was a hard bargaining position by announcing her party would go into opposition.

Ms Livni, who led her party to victory as the biggest single party in last week's election – with 28 seats to Likud's 27 – told her fellow Kadima Knesset members: "We weren't elected to legitimise this extreme right-wing government, and we must represent an alternative of hope and go to the opposition."

While Ms Livni showed every sign of being prepared to carry out her threat, at least one political source suggested the possibility remained that she might eventually join a Netanyahu coalition, provided that the Likud leader was prepared to meet the far-reaching conditions she would be expected to insist on.

These would almost certainly include the key jobs of foreign and defence ministers – presumably for herself and the former defence minister Shaul Mofaz – as well as equality between right-wingers and her party in the inner security cabinet. But possibly most difficult of all for the Likud leader, she would also probably demand a common programme based on continued negotiations with the moderate West Bank Palestinian leadership on a future two-state solution.

Mr Netanyahu is said to be concerned that a narrow right-wing government could bring him into early collision with the Obama administration in Washington. He could, for example, be caught by conflicting pressures from his right-wing allies to step up even further the expansion of West Bank settlement-building, and from Washington to halt it altogether. And he has made it clear his main regret about his previous premiership – between 1996 and 1999 – was not inviting Labour, then the major opposition party, into his coalition.

But it may not become apparent for several weeks whether he is prepared to make the significant concessions required to bring Ms Livni into the new government. Assuming Mr Peres asks him this weekend to form the government, he has 28 days to try, followed by another two weeks if necessary.

Ms Livni declared yesterday that "Kadima will continue fighting for its beliefs and its path – a diplomatic arrangement based on two states for two peoples, alongside an unrelenting war on terror." She also insisted that her party would continue to pursue other goals, including civil marriage and a new system of government.

Mr Peres is expected to use today's talks to try to persuade Ms Livni to join a unity government led by Mr Netanyahu. But he may also be personally sympathetic to the idea of a programme committed to a two- state solution – which Mr Netanyahu has never espoused. Although the President normally remains above party political issues, he restated his commitment to such a solution in a recent article in The Washington Post.

Meanwhile, the much weakened Labour party opted to refrain from recommending anyone to Mr Peres.