Labour leader Peres has the backing of party representatives
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Israeli prime minister Ariel Sharon is to begin formal talks on Sunday about broadening his coalition government.
Taking part will be the opposition Labour party and a small ultra-Orthodox grouping, United Torah Judaism.
The governing coalition has been weakened by opposition to Mr Sharon's plan for an Israeli withdrawal from Gaza and parts of the West Bank.
The Labour leadership authorised the opening of talks at a meeting in Tel Aviv on Tuesday.
Labour leader Shimon Peres last teamed up with Mr Sharon in a Likud-led unity government from 2001 to 2003.
The partnership broke down over funding for Jewish settlements on Palestinian territory.
Both Mr Sharon and Mr Peres face strong opposition within their parties to the formation of a national unity government.
At the Tel Aviv meeting, Mr Peres rounded on critics who said that Mr Sharon was only using Labour to maintain his grip on power.
"They say we're being used," said Mr Peres. "What are they using us for? To bring peace? Should we be embarrassed by that?"
Minority government
As well as UTJ, Mr Sharon is expected to approach the ultra-Orthodox party Shas with a coalition offer.
Correspondents say the invitations are bound to upset the secularist party in the existing coalition, Shinui.
BBC correspondent Paul Wood says Mr Sharon is being accused by some of playing for time, while others believe he sees the Gaza plan as his legacy for the history books - and a coalition with Mr Peres is the means to achieve it.
Mr Sharon lost his parliamentary majority on 9 June when two pro-settler ministers opposing the disengagement plan resigned.
Without Labour and UTJ, he has the support of no more than 59 members in the 120-seat Knesset.