Netanyahu Formally Tasked with Forming Next Israeli Government  

Israeli President Reuven Rivlin on Wednesday formally tasked Prime Minister Benjamin Netanyahu with forming the next government.

"I have decided to give you the role of putting together the government," he told Netanyahu at a ceremony broadcast live on Israel's main TV and radio stations. 

The incumbent has already shored up rightwing and centre-right support guaranteeing him the parliamentary majority he needs for a fourth term in office.

Netanyahu's victory in polls last week has exacerbated a diplomatic crisis with the United States, bringing frosty ties between him and President Barack Obama into focus and exposing differences over the moribund Middle East peace process.

Netanyahu surged to a surprise victory in last week's general election, beating the rival center-left Zionist Union by 30 seats to 24 in the 120-member Knesset (parliament).

But Israel's political system requires the government to have a parliamentary majority, meaning in reality that every prime minister has to form a coalition cabinet.

- Support from hardliners - 

Six factions, comprising 67 MPs, have already thrown their support behind the premier.

Netanyahu will have four weeks to complete the task of forming a new cabinet, although Rivlin can extend the deadline by another 14 days if necessary.

There will then follow weeks of coalition horsetrading as Netanyahu's potential partners battle for portfolios and prestige.

Moshe Kahlon, head of the center-right Kulanu party and a former Likud member, has reportedly already been offered the finance ministry.

Kahlon was expected to play kingmaker after the election, having refused to say whether he would side with Likud or the Zionist Union during a tight election race.

"Netanyahu decided not to wait and began to put the puzzle together, starting (Monday)," an editorial in Maariv newspaper wrote.

"The prime minister met with... Kahlon and as he said he would do... he promised him the finance ministry."

Netanyahu has the support of hardline rightwing and religious parties. Besides Likud and Kulanu, his new government is expected to include the far-right Jewish Home, Yisrael Beitenu and ultra-Orthodox parties.

Firebrand Yisrael Beitenu leader Avigdor Lieberman, who recently called for the beheading of Arab Israelis deemed unloyal to the Jewish state, could remain foreign minister, although he wants the defence portfolio, Maariv reported.

 - Spat with Washington - 

Netanyahu's inflammatory rhetoric has exposed an acute crisis in diplomatic relations with Washington, which commentators say reflects unprecedented hostility between the two governments.

Late Tuesday, Obama insisted there was a "substantive" dispute with Netanyahu over his position on the Palestinians.

"The issue is a very clear, substantive challenge," Obama told reporters in Washington.

Netanyahu on the eve of his election victory promised there would never be a Palestinian state as long as he was prime minister.

On election day, he warned that Arab Israeli voters were going "in droves" to the polls, in a final rallying cry to the rightwing electorate.

Netanyahu later apologised for his perceived anti-Arab comments and tried to back-track on remarks opposing a two-state solution.

"We believe that two states is the best path forward for Israel's security, for Palestinian aspirations and for regional stability," Obama said. 

"That's our view and that continues to be our view. And Prime Minister Netanyahu has a different approach."

The dip in relations comes as the White House suspects Israeli meddling in US foreign policy, notably over Iran nuclear talks.

A Wall Street Journal report Monday cited US officials accusing Israel of spying on negotiations with the aim of thwarting a deal.

Last week, the White House said it may withdraw crucial diplomatic cover for Israel at the U.N. Security Council as part of a policy rethink. 

The United States has traditionally used its veto to block U.N. resolutions seen as anti-Israeli.