Israeli Prime Minister Binyamin Netanyahu's new governing coalition has taken office after a parliamentary vote with powerful roles reserved for supporters of settlers in occupied territory.

While the new line-up, formally sworn in on Monday, includes more moderates than in the outgoing government, the predominance of legislators who are either settlers or among their staunchest supporters could hamper any efforts to revive Israeli-Palestinian peace talks.

But, presenting his new government to parliament and using a phrase he has used in past major policy speeches, Netanyahu said his administration "extends its hand in peace" to the Palestinians.

'Historic compromise'

"With a Palestinian partner who is willing to conduct negotiations in good faith, Israel will be prepared for a historic compromise that will end the conflict with the Palestinians forever," he said, repeating a pledge he made at the start of short-lived peace talks in 2010.

New Defence Minister Moshe Yaalon, a member of Netanyahu's Likud party, opposes any curbs on settlement-building that Palestinians say must stop before they can return to the US-sponsored negotiations, which collapsed over the issue.

Israeli construction in the occupied West Bank, territory which the Palestinians want along with occupied East Jerusalem and the Gaza Strip for an independent state, must be signed off by the Defence Ministry.

Yaalon's predecessor, Ehud Barak, who headed a centre-left party but did not run in the January 22 election, was often accused by settlers of impeding settlement projects.

Palestinians say that Israeli settlements, considered illegal by most countries, will deny them a viable state.

Source: Agencies