Israeli Prime Minister Benjamin Netanyahu struck a surprise deal with the opposition Kadima Party on Tuesday, agreeing to form a national unity government and dropping plans for a snap election.
Under terms of the agreement, Shaul Mofaz, who took over leadership of the center-right Kadima Party only six weeks ago, would become deputy prime minister as well as a minister without portfolio in the new cabinet, officials said.
The two men negotiated the 11th-hour deal as the Knesset, Israel's parliament, was voting on a motion to end its current session to clear the way for an early election that Netanyahu himself had said he wanted.
The agreement to form what will be Israel's seventh national unity government, will be put to a vote in the Knesset later on Tuesday, Speaker Reuvel Rivlin speculated in an interview on army radio.
It means that Netanyahu will head Israel's largest-ever coalition and be able to count on a majority of 94 votes in the 120-seat assembly.
According to an outline of the deal seen by AFP, Kadima and Netanyahu's right-wing Likud Party agreed to replace a contentious law that allowed ultra-Orthodox Jews to defer their military service, with new legislation that would ensure a "fair and egalitarian" sharing of the burden of serving in the army.
The two parties also pledged to change the system of government by the end of 2012, and Kadima MPs would take up key positions in Knesset committees covering foreign affairs and defense, and economic affairs.
The agreement also involves a commitment to renew the diplomatic process with the Palestinians, and a deal over the next state budget.
During the night, Netanyahu called President Shimon Peres, who is on an official visit to Canada, a statement from the prime minister's office said.
"Netanyahu spoke with Peres during the night and updated him on the decision to form a broad national unity government. Netanyahu said: 'Unity brings back stability. A broad national unity government is good for security, good for the economy, and good for Israel.'"
The news was welcomed by Peres who said: "A national unity government is good for the state of Israel," army radio reported.
Zehava Galon, leader of the left-wing Meretz Party, denounced the deal as a cynical political maneuver while Labor Party chief Shelly Yachimovich slammed it as a "pact of cowards."
"This is the most ridiculous zigzag in the history of Israeli politics," she wrote on her Facebook page. "With this final burial of Kadima, we have received a rare and important opportunity to lead the opposition, and will do so with energy and faith."
The deal is a political coup not just for Netanyahu, who heads Likud, but also for Kadima's new leader, Mofaz.
The Iranian-born former general and one-time military chief-of-staff is a hardliner who is known for his tough stance on Tehran's contested nuclear program, which much of the world believes is an attempt to develop atomic weapons.
He took control of Kadima by playing up his security credentials, defeating previous leader Tzipi Livni in the party primaries on 28 March.
He took over a party in crisis.
Although Kadima won the most parliamentary seats in the 2009 elections it failed to form a government, and multiple opinion polls have suggested it stood to lose up to half its seats in any new election.
Many commentators were quick to focus on the quick about-face of Kadima's new leader, who recently vowed never to take the party into a coalition with Netanyahu, whom he described as "a liar."
In his campaign ahead of the primaries, Mofaz said that under his leadership the party would not join Netanyahu's "bad, failed and insensitive government."
"Kadima, under my leadership, will replace [the government] in the next elections," he wrote on his Facebook page.
On Sunday, Netanyahu had called for early elections, saying he wanted to avoid a year and a half of political instability. And on Monday morning, he told his weekly cabinet meeting he was looking to hold elections on 4 September.
Nevertheless on Sunday, Netanyahu said he wanted to seek a broader-based government to assure the country's future.
The new deal effectively cancels Monday's moves by the Knesset to clear the way for the general elections.
The current parliament's mandate runs until October 2013.
