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A new Israeli governing coalition with a strong showing of pro-settlement hardliners formally took office late on Monday after confirmation by parliament days before a landmark US presidential visit.
"During all three periods in which I had the privilege to govern the state of Israel, I don't remember a more challenging period," Prime Minister Benjamin Netanyahu told the first meeting of his new cabinet as he began his third term of office.
He spoke of "dangers on one side, opportunities on the other and, of course the expectations of Israeli citizens."
"I think that it is within our ability to meet all the challenges," he said in remarks carried live by public television.
Earlier Israel's 120-member parliament approved Netanyahu's new cabinet by 68 votes to 48.
He and his 21 ministers then took their oaths of office before convening for their first session.
After more than 40 days of tortuous coalition negotiations, the government finally took office just two days before a landmark visit by US President Barack Obama.
Although the lineup includes two centrist parties -- Yesh Atid (19 seats) and HaTnuah (six seats) -- which want to renew peace talks, it is dominated by the hawkish Likud-Beitenu (31 seats) and its new national-religious ally, Jewish Home (12 seats), a far-right faction that is party of choice for settlers.
Addressing MPs before the parliament vote, Netanyahu thanked the country for electing him as premier for a third term and pledged to represent all of Israel's citizens, as well as defend them against regional threats such as Iran's nuclear programme.
"The top priority of the new government is the defence of the security of the state and its citizens," he said, adding that Israel faced "very great threats" from Iran and Syria.
He also gave a nod towards the moribund peace process with the Palestinians, which was scarcely mentioned in the coalition agreements, saying his new government would be "ready for compromises in exchange for real peace" and would talk with any Palestinian partner who would negotiate "in good faith."
Ahead of Obama's visit, which begins on Wednesday, the White House has played down expectations of a resumption of direct peace talks, which broke down weeks after they were last relaunched in September 2010.
Resuming negotiations is unlikely to be a priority for the new Israeli government, which was elected largely on socio-economic issues and which counts a strong showing of ministers with an openly pro-settler agenda.
Replacing Ehud Barak as defence minister is Moshe Yaalon, a former armed forces chief of staff who strongly supports settlement expansion in the occupied West Bank and who has been outspoken in his opposition to any construction freeze.
Another new face in government is housing minister Uri Ariel, himself an ultra-nationalist settler from Jewish Home, who at the weekend told the top-selling daily Yediot Aharonot, his aim was to increase the number of Israelis living in the West Bank.
"Today there are 360,000 and I want for there to be many, many more," he said. "Will I double the number of settlements? No. Will I provide for natural growth? Yes."
Asked how such construction would impact on the prospects of a Palestinian state, he said: "There can be only one state between the Jordan River and the Mediterranean Sea -- Israel."
The defence and housing ministries play a pivotal role in approving and advancing Israeli construction on Palestinian land seized during the 1967 Six-Day War.
Avigdor Lieberman, whose Yisrael Beitenu ran on a joint electoral ticket with Likud, said his party would "strongly oppose" any US-led pressure for a new settlement freeze.
Sources close to Yaalon also dismissed the prospect of any new gestures to the Palestinians during Obama's visit, telling public radio he would oppose any move to freeze settlements, to release prisoners or to transfer any land to Palestinian Authority control.
Opposition parties were quick to denounce the new government's pro-settler bent.
"This rightwing government is going to continue to waste billions of shekels on the settlements," Zahava Gal-On, head of the leftwing Meretz party, told public radio.