JERUSALEM, May 4 (Reuters) Israel's new government was set to be sworn-in today with a plan to decide the Jewish state's permanent borders with or without Palestinian agreement.
Incoming Prime Minister Ehud Olmert's centrist Kadima party will lead a coalition, narrower than he had sought, with the centre-left Labour Party, the pensioners' party and ultra-Orthodox Shas, securing 67 of 120 parliamentary seats.
''We will begin to work quickly. We will not have a grace period with regard to the public's expectations and the issues with which we will have to contend,'' Olmert told his designated cabinet shortly before parliament convened.
The majority Olmert now controls in the Knesset ensures he will win its approval, in a vote later in the day, of the coalition and the policy outlines he was to present in a speech to the legislature.
But the narrower his governing majority, the harder his task in eventually pushing through parliament a finalised ''convergence plan'' for the future of the occupied West Bank.
Olmert has pledged to set Israel's borders by 2010. He says he will evacuate isolated West Bank settlements while boosting large blocs in the absence of a deal with the Palestinians, whose government is run by the Islamic militant group Hamas.
Olmert, who succeeded Ariel Sharon in January after the former prime minister suffered a stroke that left him in a coma, will face challenges from nationalist and rightist parties keen to scuttle his plans to relocate some 60,000 settlers.
Although Kadima led the pack in Israel's March 28 election, it won only 29 seats in the 120-member parliament.
Olmert said before the legislative session he still hoped to persuade the ultra-Orthodox United Torah Judaism and right-wing Yisrael Beitenu parties to join the coalition, boosting its strength to 84 seats.
REFERENDUM Olmert's designated deputy, Shimon Peres, said Olmert was likely to meet Palestinian President Mahmoud Abbas after a visit to Washington this month to seek support from U S President George W Bush for the convergence plan.
Urging Israel to renew peace negotiations, Abbas told Israel's Maariv daily that he would put any deal to a referendum, sidestepping the Hamas government.
''It is my intention to bring the results of the negotiations (with Israel), if and when they end, to the Palestinian people in the form of a referendum and to give the Palestinian people the right to decide,'' he added.
Israeli officials have said there is little chance for peace talks until the Hamas-led government renounces violence, recognises Israel and embraces existing peace deals with Israel.
Hamas, sworn to Israel's destruction, says talks with the Jewish state would be a waste of time. The militant Islamist movement won control of the government in January elections.
Israel, Washington and the European Union have cut off ties and direct aid to the Hamas-led Palestinian government until it moderates its position.
Palestinian Prime Minister Ismail Haniyeh said on Wednesday peace with Israel was only possible if it quit all territory it captured in the 1967 Middle East war and recognised Palestinian rights.
The World Court has ruled all settlements on occupied territory illegal. Israel disputes this.
Key ministers in Olmert's government include Tzipi Livni, a Kadima member who stays on as foreign minister. She has been tipped as a future prime minister and will be an important figure pushing for international acceptance of Olmert's plans.
Passionate socialist and Labour Party leader Amir Peretz will be defence minister. He has little experience in government or military affairs.
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