Israel's Labour votes to stay in Olmert's govt

TEL AVIV, Oct 29 (Reuters) Israel's centre-left Labour party voted today to remain in Prime Minister Ehud Olmert's government despite his deal to include a far right-wing faction, ensuring he maintained a parliamentary majority.

The vote by the Central Committee of the Labour party, which holds 19 parliamentary seats and is Olmert's biggest coalition partner, could be key to the success of the prime minister's bid to shore up a governing coalition under fire over its handling of the Lebanon war.

Labour leader Amir Peretz was under pressure to bolt the government after Olmert invited the ultranationalist Yisrael Beitenu to join the government.

Yisrael Beitenu head, Avigdor Lieberman, a Moldova-born Jewish settler, has stoked controversy by advocating annexation of parts of the occupied West Bank and transfer of several Arab towns in Israel to a future Palestinian state.

''It's clear to me that (Lieberman) leads an extremist and utrageous view of the world, but we will stay to ensure that these views cannot be implemented,'' Peretz, who is also the defence minister, said at a party meeting in Tel Aviv.

Polls conducted in recent weeks, amid growing criticism of the government's handling of Israel's war with Hezbollah in Lebanon have showed Olmert's 29-member centrist Kadima party and Labour would fare poorly if elections were held now.

The Israeli cabinet is expected to vote on the inclusion of Yisrael Beitenu, which holds 11 parliamentary seats, in the government tomorrow. With Labour, as well as several other smaller parties, Olmert currently holds 67 out of 120 seats.

Some Labour members have said including Yisrael Beitenu in the government would turn Olmert's coalition more right-wing.

''I am pondering how a party that went to the elections to change the national daily agenda, with good people, is now in the government serving as a lifeboat for Olmert,'' Labour party member Avishai Braverman said ahead of the party vote.

In 2001, Labour served in a unity government led by Prime Minister Ariel Sharon, which included Yisrael Beitenu and other rightist parties. Labour later quit due to differences over his handling of the Palestinian conflict, prompting snap elections.

Reuters PB DB0001