JERUSALEM (Reuters) -- The slow pace of Prime Minister Benjamin Netanyahu's coalition building, held up by disputes over state benefits for ultra-Orthodox Jews, has raised speculation Israel may be forced into a new election.
Netanyahu's rightwing Likud-Beitenu ticket won 31 seats in an election on Jan. 22, more than any other party, but far short of a majority in the 120-member parliament.
President Shimon Peres asked Netanyahu to form a government for what would be his third term in office.
But after weeks of negotiating with political rivals, Netanyahu has so far reached a deal with just one other party, the centrist Hatnuah led by former Foreign Minister Tzipi Livni, which brings six seats to his coalition.
Netanyahu has until early March to find enough partners to form a government, but can ask for a single, two-week extension.
If he still has not secured a majority after that, Peres could hand the job to another party leader, but if no government emerged, Israelis would have to go to the polls again.
Yossi Verter, a political commentator for the left-wing daily Haaretz, wrote on Friday that the coalition talks appeared particularly fraught.
"As the days go by and the clock ticks toward the end of the mandate, the emotions, paranoia, hate and passions are just intensified. Usually in processes such as this, time heals, enmities calm, understandings come about, differences are resolved and trust is built. Not this time," he wrote.
A main sticking point in negotiations, party officials have said, is the future of state stipends for ultra-Orthodox Jews and military exemptions now granted to Jewish seminary students.
Israel's ultra-Orthodox parties, powerful political players for decades, took a hit in the election from the rise of new centrist party Yesh Atid, which wants to end those perks.Incompatible partners
Yesh Atid (There is a Future), headed by former TV star Yair Lapid, is the second largest party. It has formed an alliance with Bayit Yehudi (Jewish Home), a large pro-settler party headed by hi-tech millionaire Naftali Bennett.
Both have many newcomers to Israeli politics in their ranks, which was part of their allure to voters.
Political commentators say Netanyahu wants ultra-Orthodox parties in his coalition, which would probably exclude Yesh Atid and Bayit Yehudi, whose policies the ultra-Orthodox reject.
"Netanyahu does not want either of them in his government. Not Bennett and not Lapid. This is a mistake, because that would be the government that most of the Israeli public wants," Verter wrote.
The last time a party leader charged with forming a government came up short was in 2008, after then-Prime Minister Ehud Olmert resigned. Peres gave Livni the task, but she failed, leading to the election that brought Netanyahu to power.
Two opinion polls in the past two days forecast losses for Netanyahu and gains for Yesh Atid if a new election were held.
A poll in Maariv newspaper showed Likud-Beitenu dropping to 28 seats, while Yesh Atid would surge from 19 to 24. A survey released by a parliament television station showed Yesh Atid actually overtaking Likud-Beitenu with 30 seats to its 22.
"If he wants to avoid another election, Netanyahu will have to compromise about having Lapid and Bennett join the government," Maariv's political commentator Shalom Yerushalmi wrote on Friday.