Israel's Labor party chief Ehud Barak on Sunday set up a team to negotiate a possible coalition agreement with Prime Minister-designate Benjamin Netanyahu's Likud party.

Israel's Defence Minister Ehud Barak attends the annual Herzliya conference in Herzliya near Tel Aviv February 3, 2009.[Xinhua]?

Labor has certain demands concerning economic, social and security issues, and "deliberations on these issues have yet to be exhausted and seeing eye to eye on them is pivotal to an agreement," said Barak's office in a statement.

The current defense minister, who recently voiced interest in joining the new administration yet met with heavy internal pressure, is trying to shape his interests ahead of a crucial party meeting scheduled on Tuesday, reported local news service Ynet.

Israel's Likud party leader Benjamin Netanyahu (R) stands with Defence Minister Ehud Barak before their meeting in Jerusalem February 23, 2009.[Xinhua]

Senior members are expected to decide at the conference whether the party should take a role in a Netanyahu-led government, which appears all but certain to be dominated by right-wing parties, the so-called "natural allies" of the Likud party.

Presenting the conference with a de facto agreement with Likud would undoubtedly increase both the pressure on the dissidents and the possibility of it being approved, noted the report.

The latest measure marked an about-face from Barak's earlier stance. Following the Feb. 10 general election, which saw the decades-old party skid to the fourth and its lowest-ever position in the parliament, Barak and some other senior members said that the party needs to sit in the opposition and restrengthen itself in order for a forceful return in the future.

Meanwhile, opponents of a Labor-Likud partnership said that in light of the dominance of right-wing parties, Labor would be reduced to merely a fig leaf of the new government, and that the party should try to rid itself of the current image as a "hanger-on" to any ruling party.

However, Barak and his supporters stressed it is in the interests of the country for Labor to join the coalition as its participation would enable the government to better deal with crucial challenges in security and economy.

Netanyahu now faces an April 3 deadline for his cabinet-making mission. The former prime minister has initialed a coalition with the Yisrael Beiteinu party, the third largest party in the parliament, and negotiations with other rightist parties are underway.

Echoing Netanyahu's call for a unity government, Barak's office on Sunday urged the centrist Kadima party to "begin negotiations as well," saying that Israel "needs a unity government and not a narrow right-wing one."

Yet talks between Likud and Kadima, the largest faction with 28seats in the 120-seat parliament, have run into a snag, as wide gaps remain between Likud's best offers and Kadima's demands.

Netanyahu is widely expected to be able to cobble together a coalition within the time limit. Yet should he fail, President Shimon Peres would assign the cabinet-making task to a second and even a third lawmaker, who respectively have 28 and 14 days. Were all the efforts to be futile, Israel would then go to another general election.

Till the formation of the new government, caretaker Prime Minister Ehud Olmert, who was forced to leave office by a corruption scandal, will remain in power.

(Xinhua News Agency March 23, 2009)