He has had to balance the need to keep together his right-wing coalition who are deeply sceptical of the current peace process with regional and international pressure to continue implementing land deals with the Palestinians.

The vote for early elections by Israel's parliament signalled the eventual failure of this difficult balancing act.

Israel - and the Middle East peace process - now face a period of political uncertainty as politicians gear up for an election campaign.

'Tough on peace'

"We will see a fragmentation of Israeli politics": the BBC's Paul Adams in Jerusalem

Mr Netanyahu's government has said it remains committed to the interim Wye peace deal it signed with the Palestinians in October.

However, the government had already decided to suspend the agreement prior to the parliamentary vote on early elections.

And Israeli officials admit the circumstances now are not favourable for implementing the deal.

While Mr Netanyahu is fighting for his political life on a slogan of being tough on peace, he knows another transfer of West Bank land to the Palestinians could cost him crucial support.

Some of his right-wing allies remain implacably opposed to any further territorial concessions.

Palestinian frustrations

The peace process therefore looks likely to be effectively frozen for the duration of the campaign.

The Palestinian Authority is likely to be unimpressed by Israeli contentions that peace must wait, although it realises that the election offers a chance for the removal of Mr Netanyahu.

There is also little chance of serious progress on final status issues like Jerusalem, the future of Jewish settlements and the fate of Palestinian refugees during an election campaign.

These were meant to have been resolved by May next year.

With stalemate looming once again in the peace process, Palestinian anger in the West Bank has already begun to simmer.