Israel's Benjamin Netanyahu formally notified President Shimon Peres on Saturday that after 40 days of tortuous negotiations with potential coalition partners he had formed a new government.

"As you know I was able to form a government," Peres's office quoted premier Netanyahu as saying at a meeting in Jerusalem. "You gave me the task and I carried it out."

Israeli Prime Minister Benjamin Netanyahu is to inform President Shimon Peres later on Saturday that after 40 days of negotiations with coalition partners he has finally formed a new government.

Eleventh-hour agreements were signed on Friday with the centrist Yesh Atid and far-right Jewish Home parties, which held the key to building a government with a majority in the 120-seat parliament.

Israeli Prime Minister Benjamin Netanyahu and his center-right partners have overcome differences with rightwing factions to pave the way for an accord on a new government on Friday, reports said.

Media outlets said that Yair Lapid, head of Yesh Atid, and Naftali Bennett of Jewish Homeland renounced their demands for the post of deputy prime minister, a key obstacle to finalizing a coalition agreement.

After weeks of deadlock, Israeli Prime Minister Benjamin Netanyahu reached an agreement with coalition partners on Thursday to form a new government that appears set to address pressing domestic issues while putting peacemaking with the Palestinians on the back burner.

The new government will be the first in years without ultra-Orthodox Jewish parties.

Israeli premier Benjamin Netanyahu on Wednesday pledged to turn to the ultra-Orthodox parties to form a coalition if the centrist Yesh Atid refused to back down from its "exaggerated demands".

The Israeli leader has been holding intensive coalition talks ahead of a looming March 16 deadline to announce the shape of his new government. If he fails to piece together a working majority of at least 61 MPs, the task will be handed to another party leader.

Israel's incoming cabinet, which is in the final stages of being formed, will count just 20 ministers down from 28 in what the press on Tuesday hailed as a major coup for the centrist Yesh Atid.

The more streamlined cabinet had been a central plank of the campaign of Yesh Atid leader Yair Lapid, whose newly-formed party won a shock victory in the January election, becoming overnight Israel's second political faction.

Israeli Prime Minister Benjamin Netanyahu on Sunday entered the final stretch of talks to form a new coalition government which will be sworn in just days before a visit by U.S. President Barack Obama.

Time is of the essence for the Israeli leader who is facing a final deadline of March 16 to announce the shape of his new government after receiving a two-week extension to the initial 28 days he was given.

Prime Minister Benjamin Netanyahu on Monday pledged to ask President Barack Obama to free an Israeli spy jailed since 1985 when the U.S. leader visits Jerusalem later this month.

"This issue will come up during President Obama's visit," the prime minister's office quoted him as saying in a meeting with the wife of Jonathan Pollard, serving a life sentence for espionage in the United States.

Prime Minister Benjamin Netanyahu will within days stitch together a coalition that will draw in the centrist Yesh Atid and nationalist Jewish Home parties but exclude ultra-Orthodox groups, media reported on Monday.

Netanyahu was on Saturday given two more weeks to form a new government, four weeks after initially being tasked to do so by President Shimon Peres.

Israeli President Shimon Peres on Saturday gave Prime Minister Benjamin Netanyahu a two-week extension to form a new coalition government, after he failed to do so in an initial four-week period.

"I am giving you another two weeks, by law, to complete the task of forming the government," Peres told Netanyahu during a televised statement at the presidential residence.