Prime Minister Benjamin Netanyahu has announced a coalition deal with former Israeli Foreign Minister and longtime rival Tzipi Livni.
Her main role will be to handle efforts to restart the stalled diplomacy with the Palestinians.
Livni will be a moderate voice for the Israeli government, led by Netanyahu’s right-wing Likud.
It is a positive signal ahead of next month’s visit by Barack Obama, on a push to resume peace talks deadlocked since 2010.
Netanyahu won the election in January, but is short of a majority.
The hope is that the union with Livni will persuade other centrist parties to come on board as well to form a governing coalition.
“I was given the appropriate authority to be in the role of the negotiator in the name of Israel with the aim of ending the conflict with the Palestinians on the basis of a two-state solution.” Livni told reporters.
Palestinians, meanwhile, took to the streets of the West Bank and Gaza to call for the release of prisoners from Israeli jails.
Nearly 5000 are being held, some without charge. Four are on hunger strike.