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Sources close to Prime Minister Ehud Olmert said yesterday the coalition crisis would leave Olmert no choice but to invite Yisrael Beitenu to join the coalition. Yisrael Beitenu chairman MK Avigdor Lieberman said the only way he would join the coalition would be if his party replaced Labor. However senior Kadima members said Olmert would not be dragged into such a move, noting that Lieberman would demand a high price, such as the defense portfolio.

Kadima MK Avigdor Itzchaky, chairman of the ruling coalition, threatened yesterday to break up his party's partnership with Labor, after the coalition failed for a second time this week to forge a majority for NIS 1.8 billion in budget cuts to pay for the war in Lebanon.

"This means that today there is no coalition in the State of Israel," Itzchaky said.

"Labor is not a coalition partner that can be trusted," he added, following the refusal of Labor lawmakers Avishay Braverman and Orit Noked to vote for the cuts at yesterday's Knesset Finance Committee meeting. Itzchaky said he would advise Prime Minister Ehud Olmert to begin talks aimed at broadening the coalition. "Anyone who votes against this coalition doesn't want it to survive," he also said.

"For reasons of conscience I will not raise my hand to support a budget which harms the weak, which harms the Negev and the Galilee," Braverman told the Knesset Finance Committee.

Agriculture Minister Shalom Simhon slammed Noked and Braverman's conduct calling it "disgraceful." Sources in Labor cited a crisis in their party as the reason for instability in the coalition, saying that Labor chairman Defense Minister Amir Peretz has lost control.

"The Finance Committee must approve the cabinet's decision and respect its will," he said, adding that problems would be solved in the 2007 budget.

Finance Minister Avraham Hirchson told the Knesset plenary yesterday in a session called during its recess that the costs of the war were great and priorities had to be changed. "Anyone who doesn't understand this has to come down to earth," he said.