Australia on Wednesday admitted for the first time that a man found hanged in a Tel Aviv jail worked for the Israeli government, but stopped short of confirming he was a Mossad spy.

Dual Australian-Israeli citizen Ben Zygier, known as "Prisoner X", died in 2010 in an allegedly suicide-proof cell with Israel going to extreme lengths to cover it up, sparking claims by Australian media that he worked for Mossad.

The Pentagon's new chief hosted Israeli Defense Minister Ehud Barak on Tuesday for talks after having faced allegations from some U.S. senators that he was too critical of the Jewish state.

For his first meeting with a foreign counterpart, Defense Secretary Chuck Hagel, who was sworn in last week, chose to meet Barak, apparently in a bid to reassure America's ally and its advocates in Washington over his stance towards Israel.

U.S. Vice President Joe Biden stressed on Monday that Washington is “urging every nation in the world,” mainly European countries, to consider Hizbullah a terrorist organization.

Iran is “using terrorist proxies to spread violence in the region and beyond the region, putting Israelis, Americans, citizens of every continent in danger,” Biden told the American Israel Public Affairs Committee (AIPAC), the largest pro-Israel lobby in the United States.

Defense Minister Fayez Ghosn warned on Tuesday of the delicate and dangerous security situation in the country due to the recent developments and strong rhetoric used by officials.

“If the latest developments in Lebanon remain the way they are, then they will lead (the country) to sedition,” Ghosn said in comments published in As Safir newspaper.

Israeli Prime Minister Benjamin Netanyahu said Monday that diplomacy has so far failed to deter Iran from pursuing its nuclear program, warning the Islamic republic was getting closer to crossing a crucial "red line."

"Iran enriches more and more uranium, it installs faster and faster centrifuges," and it is "running out the clock" on diplomatic efforts to prevent it from obtaining a nuclear capability, Netanyahu said.

Prime Minister Benjamin Netanyahu on Monday pledged to ask President Barack Obama to free an Israeli spy jailed since 1985 when the U.S. leader visits Jerusalem later this month.

"This issue will come up during President Obama's visit," the prime minister's office quoted him as saying in a meeting with the wife of Jonathan Pollard, serving a life sentence for espionage in the United States.

Israel on Monday launched a special bus service to transport Palestinians from the occupied West Bank to work in the Jewish state, triggering accusations of racism from a local rights group.

The service to Tel Aviv and central Israel starts at the military post at Eyal -- near the West Bank city of Qalqilya -- where Palestinians with permits to enter Israel are checked before being allowed to board.

Israel's sole crossing for goods traffic into the Gaza Strip remained shut on Monday, 24-hours after Israel said it would end a week-long closure.

Israel said the holdup was because of attempts by the strip's militant Hamas rulers to introduce procedural changes and divert customs revenues earmarked for their rivals, the West Bank-based Palestinian Authority.

Progressive Socialist Party leader MP Walid Jumblat noted on Monday that the rich history of Sidon should not be erased by the recent incidents that have taken place in the southern city.

He said in his weekly editorial in the PSP-affiliated al-Anbaa website: “The authority of the state should be restored in Sidon in order to prevent the city from being dragged towards suspicious strife.”

Prime Minister Benjamin Netanyahu will within days stitch together a coalition that will draw in the centrist Yesh Atid and nationalist Jewish Home parties but exclude ultra-Orthodox groups, media reported on Monday.

Netanyahu was on Saturday given two more weeks to form a new government, four weeks after initially being tasked to do so by President Shimon Peres.