Benjamin Netanyahu was sworn in as Israeli prime minister late tonight.
The ceremony took place in the Knesset chamber in Jerusalem after the Likud leader won parliamentary approval for his government.
In a speech introducing his cabinet, Mr Netanyahu assured Palestinians that peace with Israel was possible.
He also hit out at Iran and ‘extremist Islam’ for threatening Israel's existence.
Returning to power 10 years after he was voted out as prime minister, Mr Netanyahu read out a cabinet list that included ultranationalist Avigdor Lieberman as foreign minister. His policies toward Israeli Arabs have stoked international concern.
The Knesset backed the appointments by a vote of 69 to 45 with five abstentions, after a six-hour debate, and Netanyahu and fellow cabinet ministers then took the oath of office.
‘I say to the Palestinian leadership that if you really want peace we can achieve peace,’ he told Netanyahu told the Knesset session, which was interrupted by heckling from Arab and left-wing parliamentarians.
He offered negotiations on ‘three parallel tracks, economic, security and diplomatic’ with the Palestinian Authority.
While describing a final peace settlement under which Palestinians would run their own affairs, Mr Netanyahu made no specific mention of establishing a Palestinian state - a key demand of President Mahmoud Abbas, and one which is backed by Washington.
His coalition pact binding the various parties, however, contains a pledge to respect Israel's international agreements, a formula that includes accords on a Palestinian state.
