Benjamin Netanyahu's hawkish Likud party launched talks on Wednesday with right-wing parties on forming Israel's next government after he failed in initial efforts to enlist his main centrist rival in a broad coalition.

Netanyahu, who has said he wants to shift the focus of Palestinian statehood talks from territorial to economic issues, was chosen on Friday by President Shimon Peres to try to form a government and become prime minister for the second time.

Likud negotiators met officials of the ultranationalist Yisrael Beiteinu party of Avigdor Lieberman and other right-wing factions later near Tel Aviv on terms for political partnership in a governing coalition.

A spokeswoman for Lieberman said he would push to secure either the defense, finance or foreign affairs portfolio for himself. She said the party also wants the justice and internal security portfolios.

Yisrael Beiteinu, which came in third after the centrist Kadima party and the Likud in a February 10 election, opposes Israeli withdrawal from the occupied West Bank.

It advocates trading land in Israel where Arab citizens live for Jewish settlements in the West Bank in any peace deal with Palestinians and calls for all Israelis to take an oath of loyalty to the Jewish state.

A narrow right-wing government and a prominent role for Lieberman could put Netanyahu on a collision course with Washington, where the Obama administration has pledged swift pursuit of an Israeli-Palestinian peace deal.