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Labor Party Chairman Amir Peretz announced Wednesday that he opposes bringing MK Avigdor Lieberman's Yisrael Beiteinu Party into the coalition, but that did not appear to dent Prime Minister Ehud Olmert's determination to try to broaden the coalition and thereby increase his government's stability.

Olmert's aides made it clear Wednesday night that they intend to continue talking with Lieberman with the aim of bringing him into the coalition, and blamed rebels in the Labor Party for forcing Olmert's hand with their lack of coalition discipline.

During a tense meeting between Olmert and Defense Minister Peretz Wednesday, the Labor leader told the prime minister that most Labor MKs oppose Lieberman's inclusion in the government.

However, Olmert told Peretz that if Lieberman did join the coalition, there would be no change in the government's guidelines, nor would Labor's ministries be reshuffled. Therefore, he argued, Labor has no reason to oppose Lieberman.

The prime minister also reminded Peretz that during the April coalition talks, the two agreed that no Zionist party would be ruled out as long as it accepted the government's guidelines.

But Peretz told Olmert that he could not "see a coalition that includes Yisrael Beiteinu. It is not a matter of the rejection of an individual, but of an entirely different worldview on all issues."

He added that he believed that it would be possible to reinforce the existing coalition without much effort.

"How does he think we can reinforce the coalition?" responded an Olmert aide. "It is no secret that the prime minister is not pleased with the Labor Party. If the coalition were stable, it would be a different story. Amir Peretz must understand that [MK] Shelly Yachimovich and the Labor rebels are the ones who brought Lieberman."

Peretz, added the aide, "is unable to bring 19 votes [the number of Labor MKs]. It [Labor] is not a party, it is a militia. So what is the prime minister supposed to do? Go down with them?"

Notwithstanding the tension that prevails in relations between Olmert and Peretz, aides to both leaders stressed that there is no coalition crisis. However, they added, this dispute could yet generate one.

Sources close to Peretz said that since an agreement with Lieberman has still not matured, there is no room to talk of a crisis; Peretz merely announced his intentions.

Olmert aides said that they are not bothered by Peretz's opposition to Lieberman joining the coalition, because Lieberman will have to accept the existing government guidelines. They also noted that Peretz agreed to such a coalition expansion during negotiations on the formation of the government in April.

Peretz intends to hold a meeting of Labor's Knesset faction on Sunday to discuss Olmert's plans to bring Lieberman into the coalition, as well as the Yisrael Beiteinu chairman's proposal for changing the system of government from a parliamentary to a presidential one.

Peretz plans to voice his views on both Lieberman and the idea of changing the system of government, following a long silence that has sparked criticism from within his party of his alleged weak leadership. Sources close to Peretz said that he is opposed to changing the system of government to a presidential one.

MK Danny Yatom, one of the Labor Party "rebels," described Peretz's failure to speak out against Olmert's decision to offer Lieberman a spot in the coalition without consulting with him as "very serious."

"I have argued for some time now that the Labor Party lacks leadership," Yatom said.

Labor's faction chairman, MK Ephraim Sneh, described Olmert's offer to Lieberman a "slap in the face of Arab Israelis and democracy. Lieberman poses a threat to Arab citizens. Olmert should explain to me how his declarations about equality for all citizens fit with Lieberman joining the coalition."

Lieberman supports transferring Arab Israeli towns to the Palestinian Authority as part of peace deal, as well as stripping citizenship from individual Arabs who, he says, function as a "fifth column." He has also spoken of instituting the death penalty for Arab MKs who, he alleges, have committed treason.

Peretz to PM: I'm opposed to adding Lieberman to coalition

Labor Party Chairman Amir Peretz told Prime Minister Ehud Olmert on Wednesday that he opposes adding Yisrael Beiteinu to the coalition government.

According to Peretz, his opposition is not related to personal differences with Yisrael Beiteinu Chairman Avigdor Lieberman. Peretz said Yisrael Beiteinu's world view is completely different from the Labor party philosophy on all issues.

Peretz told Olmert he believes it is possible to strengthen the current coalition in other ways.

The Labor Party faction will meet on Sunday to determine the party's stance on three issues - the potential expansion of the coalition, the proposal to change the system of government, and the 2007 state budget.

Meanwhile, senior Labor Party officials are encouraging Prime Minister Ehud Olmert to invite Yisrael Beiteinu to join the coalition.

Sources who described talks between Olmert and senior Labor officials said that the latter urged the prime minister to make every effort to preserve a stable coalition, and pointed to Lieberman's party as the best way of doing this.

The Labor officials told Olmert that he cannot rely on their party, because the party infighting has escaped the control of its leader, Defense Minister Amir Peretz. Due to Peretz's loss of control, these officials said, they could not guarantee that Labor's 19 Knesset members would support the 2007 state budget.

According to the sources, Olmert appears to be serious about including Lieberman in his government. In statements made Tuesday to members of his own Kadima Party, Olmert said: "We are on the verge of expanding the coalition in the very near future ... and this will enhance the country's political stability."

"To all those living with the illusion that the government will have to face serious challenges, I say be calm, the government will last for a long time," he added, according to Kadima members. "There will be no elections in the near future."

People present at the meeting said it was obvious that Olmert was referring to Lieberman and Yisrael Beiteinu joining the coalition.

But the prime minister stressed that any expansion of the coalition would be based on the existing coalition agreements, and that he considered the Labor Party the senior coalition partner.

Not all Labor MKs support bringing Lieberman into the coalition, however. MK Etan Cabel fervently opposed Lieberman's inclusion, saying that bringing his "extreme right stance into the coalition would be tantamount to political stalemate."

Olmert has been busy laying the political groundwork for Lieberman to join the coalition: He has met with the Yisrael Beiteinu leader and backed Lieberman's ca ll for changing Israel's system of government from a parliamentary to a presidential one.

Olmert meets Shalom, without Netanyahu's knowledgeOlmert met Wednesday with Likud MK Silvan Shalom to discuss, among other things, the suggestion to change the system of government.

Shalom said that that he is opposed to changing the current system, while Olmert made it clear that Kadima would support the motion in its preliminary hearing in the Knesset.

It is unclear whether the meeting had anything to do with the Prime Minister's recent statements regarding his desire to expand the coalition.

Sources from Likud Chairman Netanyahu's inner circle expressed their vexation over the meeting and said that it is improper for an opposition MK to meet with the PM independently.

In reaction, Shalom said that he does not need anyone's approval inorder to meet with the Prime Minister. He rejected the criticism over the meeting as "childish, petty and stupid."

According to Shalom, the meeting touched on political matters, but revolved around pressing national issues such as the threat posed by North Korea and Iran.

MK Vilnai dismisses Olmert's meeting with Lieberman as 'media spin'Senior Labor legislator Matan Vilnai on Wednesday dismissed Prime Minister Ehud Olmert's moves to bring a far-right party Yisrael Beiteinu and its leader, Avigdor Lieberman, into the government as media spin.

The talks with is a "media spin aimed at diverting the public's attention from the war in Lebanon and its failures," Vilnai charged.

Haaretz has learned that Olmert also met with Shas Chairman Eli Yishai and informed him of his plan to include Lieberman in the coalition. Yishai told Olmert that the ultra-Orthodox Shas Party does not oppose Lieberman's entry into the government.

Meanwhile, Yishai and Lieberman have not remained idle: They met Tuesday to discuss matters of mutual interest. The meeting took place at Moshav Avnei Eitan in the north, where Yishai and his family are on holiday. It was arranged when Lieberman, who is vacationing in the Golan Heights, called Yishai on Monday.

During the meeting, Lieberman asked for Yishai's opinion on his proposed change in the system of government. Yishai said that he agreed with parts of it, but that an extensive discussion of the matter is needed. Lieberman asked Yishai to do his best to convince Shas's spiritual leader, Rabbi Ovadia Yosef, to extend his support to the initiative.

Contrary to some media reports, the two party leaders did not discuss the sensitive issue of civil unions - essentially, civil marriages held in Israel and recognized by the state.

However, at the end of the meeting, Yishai said that Shas would not compromise on this issue, while Lieberman said that his party is equally unwilling to make any concessions on the matter. Lieberman added that his party plans to pass legislation on this issue by the end of the Knesset's winter session.

Shas appears to be interested in bringing Yisrael Beiteinu into the coalition both as a counterweight to Labor and in order to stabilize the government, thereby giving it greater longevity.

However, a senior Shas source predicted Tuesday that the contacts between Lieberman and Olmert will come to naught, and Yisrael Beiteinu will not join the coalition. He said that the whole purpose of the meetings is to "grab headlines."

"It's all a show," he added.

The source said that both Lieberman and Olmert know that the time is not ripe for Yisrael Beiteinu to join the government, and that there is no chance of passing laws that would either change the system of government or recognize civil unions.

"Lieberman is trying to divert attention and appear as someone who can hold his own," the source said. "Olmert has bought another day in which no one is talking about his apartment on Cremieux Street and no one is talking about a state commission of inquiry. Everyone benefits."

He explained Yishai's decision to meet Lieberman as "jumping on the media headlines bandwagon."

According to the Shas source, Olmert is trying to pressure United Torah Judaism through his talks with Lieberman, in order to get the ultra-Orthodox party to join the coalition on the basis of the terms proposed several months ago. Talks between Kadima and UTJ about bringing the latter into the coalition have been frozen for months, but never collapsed completely.

UTJ MK Moshe Gafni responded Tuesday that "we will not be part of a coalition that takes action to pass a civil union law." He said that whether Yisrael Beiteinu joins the coalition or stays out of it is irrelevant, since Kadima is also pushing for a civil union law.

He also stressed that his party is strongly opposed to any change in the system of government.

But Gafni aimed the brunt of his attack against Shas, for what he claimed was its failure to insist on implementation of a coalition agreement to institute an ultra-Orthodox education law.

"I do not intend to keep quiet over the education law," Gafni said, adding that he intends to submit a no-confidence motion during the Knesset's winter session as a result of Shas's failure on this issue.

"I don't understand why they are in the government," he said. "Is it the jobs?"