Israeli Prime Minister Ariel Sharon and the leader of the opposition Labour Party, Shimon Peres, are inching towards forming a coalition government.
Peres (r) has been in opposition to Sharon since 2003
Facing stiff opposition to the alliance from his Likud party, Mr Sharon warned of fresh elections if it failed to support the negotiations.
Mr Sharon needs the support of Labour to implement his Gaza withdrawal plan, which Likud rejected in a May poll.
Mr Sharon and Mr Peres held preliminary talks on Monday.
Reports quote officials from Mr Sharon's office saying the negotiations were "held in a good atmosphere", but that no detailed discussion of the make-up of a new government had begun.
BBC Middle East correspondent Paul Wood reports from Jerusalem that this could be the start of lengthy negotiations.
He says Mr Peres will want an important job in any coalition, and Labour will want several things Mr Sharon will find it hard to grant.
GAZA PULL-OUT PLAN
Pull-out from all 21 settlements in Gaza and four in West Bank
Preparation period due to end by March 2005
Four-stage evacuation to be completed by end of 2005
Each stage requires cabinet vote
Labour is pushing for faster withdrawal from Gaza, currently planned for some time before the end of next year.
The opposition party is also pushing for a bigger withdrawal from the West Bank, and direct talks with the Palestinians.
In return, Mr Peres offers substantial parliamentary support for the Gaza disengagement plan, and stability for Mr Sharon's government.
After the talks, Mr Sharon survived another no-confidence vote in parliament.
Opponents and supporters both mustered 55 votes in the 120-member Knesset. The opposition needed 61 to topple the government.
Opposition to unity government
Ariel Sharon lost his majority last month when right-wingers angry at the Gaza plan withdrew from his coalition.
The talks on a national unity government became possible after three conditions for Labour taking part in negotiations were fulfilled:
- government acceptance of the withdrawal plan
the far-right National Union's withdrawal from the government
the attorney-general's decision not to charge Mr Sharon over two corruption cases.
Both Mr Sharon and Mr Peres face strong opposition in their parties to the formation of a national unity government.
PERES AND SHARON: PARALLEL LIVES
Peres began political life in the socialist Mapai party, which dominated Israeli politics from 1948-68; Sharon's family were also party members
Sharon adviser to Prime Minister Yitzhak Rabin 1974-76; Peres served as Rabin's foreign minister
Sharon won elections in 2001 and 2003; Peres lost five parliamentary elections and the presidency but won Nobel Peace Prize in 1994
Sharon reviled by Arabs for leading 1982 invasion of Lebanon and known as "bulldozer" for role in expanding Jewish settlements
Peres seen as dove for arranging interim peace deals with Palestinians, but thought to be architect of Israel's nuclear programme
Our correspondent says Mr Sharon's response to Likud resistance - to back him or face elections - are scare tactics, the minimum needed to cut through the toxic atmosphere of hostility in Likud towards any dealings with the opposition.
One Likud central committee member said that Labour would be like a cancer eating into the party.
Some Labour party members are opposed to what they see as propping up Mr Sharon's government and believe the party should be pushing for new elections.
Likud and Labour formed a coalition under Mr Sharon in 2001-03, but the two parties fell out over funding for Jewish settlements built on land captured in the 1967 Arab-Israeli war.