Israel's Netanyahu makes first move for new government

By Allyn Fisher-Ilan

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu took a first step in forming a new government on Tuesday, announcing a coalition deal with former Foreign Minister Tzipi Livni and naming her to handle efforts to renew stalled diplomacy with the Palestinians.

Netanyahu's choice of Livni, a moderate voice for a government led by his right-wing Likud party, seemed a positive signal ahead of U.S. President Barack Obama's visit next month on a push to resume peace talks deadlocked since 2010.

In televised remarks, Netanyahu said the union with Livni, a longtime rival, was intended to provide his emerging government with a "wide and stable government that unites the people".

He said he wanted to face down what he called "tremendous challenges" posed by a nuclearising Iran and the violence of neighboring Arab revolts.

Netanyahu said Israel had to "make every effort to promote a responsible peace process with the Palestinians," adding that he hoped for resumption of talks that froze after a dispute over Jewish settlement building.

Without expressly giving a title for her new diplomatic role, Netanyahu said Livni would become a "senior partner in the effort" to revive Middle East diplomacy. She would also become justice minister, a job Livni has also held previously.

The coalition union with Livni's six-member faction will likely ratchet up pressure on Israel's other fractious centrist and religious parties to come on board Netanyahu's emerging new government as well.

After winning a January 22 election, though short of a majority in parliament, Netanyahu has another month to secure enough coalition partners to control at least half of the legislature's 120 seats so that he can govern.