Netanyahu clinches deal to form new Israeli government

Vulnerable to policy demands

Such a narrow majority will make Netanyahu vulnerable to policy demands from even his most junior partners, continuing a long tradition of instability in Israeli politics.

Netanyahu said he would seek to enlarge the coalition. "Sixty-one is a good number, 61-plus is better," he said, without elaborating as to which party he would seek to add.

Jewish Home seems certain to push for the expansion of Jewish settlement in occupied territory, a policy that could deepen Israel's rift over the issue with its main ally, the United States, and the European Union.

Bennett, the party's leader, has called for the annexation of parts of the West Bank. That goes beyond Netanyahu's pledge to continue to build in settlements only in areas Israel intends to keep in any future peace deal with the Palestinians.

In return for Jewish Home's support, Netanyahu bowed to its demand for the justice minister portfolio, a post critical to the smooth passage of cabinet-approved legislation to parliament for ratification.

Under a compromise, some of the minister's authority may be curbed, Israeli political sources said. The exact job definition was likely to be ironed out only in talks expected to take place overnight until the agreement between the parties is signed.