The Israeli Foreign Minister, David Levy, has quit Benjamin Netanyahu's ruling coalition because of his opposition to the country's proposed budget.

"I am no longer a member of this government," he told a news conference in Tel Aviv.

His departure is likely to leave Prime Minister Netanyahu clinging onto power with a majority of one.

Mr Levy said he would submit his letter of resignation to Mr Netanyahu on Sunday.

He added that his partnership with the premier "has failed."

Mr Levy attacked the Government for ignoring the plight of the poor and unemployed and for giving up on the peace process with its Arab neighbours.

In a statement, Mr Netanyahu said: "The Prime Minister regrets the Foreign Minister's decision and hopes he will reverse it."

As Israeli law gives a 48-hour period between the issuing of a resignation letter and the decision coming into effect, there remains time for Mr Levy to change his mind.

BBC Correspondent Lyse Doucet assesses the reasons behind David Levy's resignation. (2'24")

The Foreign Minister, who leads a five-person group within the Government, failed to turn up for a cabinet meeting on Sunday morning to discuss the financial bill.

He said on Thursday he intended to quit over the issue but he had made similar threats on six previous occassions without acting on them.

Mr Levy's opposition to the $58bn budget proposals stems from social security cuts combined with increased spending designed to placate Mr Netanyahu's hardline religious and right-wing allies.

The Government had postponed the vote on the budget until Monday in the hope of reaching a compromise with Mr Levy.

But Mr Netanyahu's room for compromise was hampered by other cabinet ministers who fiercely opposed any extra spending within the austerity package.

Mr Levy said previously his resignation would come into effect only after the parliamentary vote.

The departure of his Gesher faction will leave Mr Netanyahu's supporters holding 61 seats in a 120-member parliament with possible implications for the stalled peace process between the Israelis and Palestinians.

The Agriculture Minister, Rafael Eytan, said "the Government in its present form is hanging by a thread."

He called on Mr Netanyahu to hold fresh elections.
 

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