However, the 10 seats won by Israeli-Arab parties in last week’s general election, plus possible support from religious or centre-right parties, should enable the acting prime minister's plan to proceed if he puts together the next ruling coalition as expected.

 

Arab parties had demanded a recount of ballots in some Arab towns.

 

After the new tally, Labour lost one seat, and the United Arab List's representation in the 120-seat parliament rose to four from three.

 

The election commission said in a statement late on Sunday that the results from five polling stations had been logged incorrectly.

 

Coalition talks

 

The coalition-building process began officially on Sunday and parties presented their choices for the country's next prime minister to the president, Moshe Katsav.

 

The government, like every other government in Israel's 58-year history,will be a coalition because no one list won an outright majority of votes.

 

Olmert, whose Kadima Party won the elections with 29 seats, wants to draw Israel's final borders with the West Bank by withdrawing from some Jewish settlements on the Palestinian territory while annexing the three largest.

 

With Labour holding 20 seats, Olmert could count on a majority of 61 seats of Jewish parties favouring withdrawal.

 

But for a plan so controversial, Olmert would like to rely on the support of a Jewish bloc without having to turn to Arab politicians outside his coalition.

 

It is possible he would be able to persuade the ultra-Orthodox party Shas or a right-leaning party of Russian immigrants called Israel Beitenu to back his plan.

  

Labour eyes premiership

 

Labour, led by Amir Peretz, a former union leader, is the second-largest faction in parliament.

 

But Peretz is reportedly exploring the possibility of trying to form and lead a coalition with religious and right-wing parties that, like Labour, want the government to spend more money on Israel's poor.

 

The far-right National Union/National Religious Party alliance, desperate to prevent Olmert from withdrawing from occupied land, has said it will endorse Peretz for the job.

 

And senior members of the former governing right-wing Likud party, who have little time for Olmert after he defected to Kadima last November, have also said they would prefer to sit in a cabinet headed by Peretz.

 

The Israeli daily Haaretz reported on Monday that Peretz had angered senior Labour figures, with some describing him as having a "Napoleon complex".

 

Matan Vilnai, one Labour politician, said: "People didn't vote for us so that we could lead a right-wing, ultra-Orthodox government. It's not completely legitimate and it's also stupid."

 

Sharon out

 

Meanwhile, the Israeli cabinet will next week pronounce the Israeli prime minister “permanently incapacitated”, according to Israeli media reports.

 

Ariel Sharon has been in a coma since a stroke in January and Olmert will be declared head of government at a cabinet meeting on Sunday.

 

The decision will come into effect on April 14, the end of the 100-day period required under the law for Sharon to be declared permanently incapacitated, provided that he does not emerge from his coma.

 

The decision will be purely formal given that Olmert has already exercised all of Sharon's duties since becoming acting prime minister when his mentor collapsed.