Sharon fights to save his government

Sharon still holds onto a majority in parliament

Intensive behind-the-scenes negotiations are going on in Israel to avert the collapse of the coalition government after Prime Minister Ariel Sharon sacked several cabinet ministers.

The ministers belonged to two ultra-orthodox parties - Shas and United Torah Judaism - who voted against an emergency finance bill Mr Sharon is pushing through parliament to help pay for Israel's military operations against the Palestinians.

We wish him luck if he thinks he can go to elections without Shas or other ultra-Orthodox parties

Fired Shas minister Shlomo Binizri

If the dismissals go through, the Sharon government's survival will depend on the centre-left Labor party which traditionally takes a softer line on the conflict with the Palestinians.

The chairman of Mr Sharon's coalition, Zeev Boim of the Likud party said that he was working to bring the centrist Shinui party and some members of the right-wing National Union into the coalition.

Shinui, a secular party, has refused to serve in a government alongside Shas.

'No early elections'

"I don't see elections on the horizon," Mr Boim said.

Mr Sharon is refusing to rescind his dismissal of the ministers, whose abstentions in the Knesset on Monday caused the austerity plan to be rejected.

The government will present the package of tax increases and welfare cuts to the Knesset for a second time on Wednesday.

But BBC Jerusalem correspondent James Reynolds says Shas is may now be reconsidering its position, and may decide it will retain more influence by remaining within the government.

If Shas and the UTJ leave the government altogether, Mr Sharon will have the support of only half the Israeli parliament.

Under Israeli law, the cabinet dismissals come into effect after 48 hours, at which point Mr Sharon could find himself leading a minority government and vulnerable to a no confidence vote.

Special interests

Israel has overspent on the military budget

Shas and the UTJ are trying to get special government subsidies for Orthodox religious students exempted from the austerity package.

Mr Sharon already faces pressure from his own Likud party which last week backed his leadership rival Binyamin Netanyahu in a vote ruling out a Palestinian state in the occupied territories.

But he has won praise from secular Israelis, many of whom are tired of the way religious parties, and Shas in particular, have used the power to make or break past governments to pursue their own narrow interests.

The proposed $2.7bn austerity package calls for widening the budget deficit to 3.9% of gross domestic product from 3%, amid government warnings that the deficit could hit 6% and affect Israel's credit rating if the plan was not adopted.