ISRAEL prepared for the long and messy business of building a coalition yesterday. There was only a short pause for breath after the three-month election campaign that saw Ariel Sharon returned as Prime Minister with a much-increased mandate.

Having secured 37 seats in the 120-member Knesset — nearly twice the number of the humiliated Labour opposition — Mr Sharon started putting together a negotiating team to persuade other parties to join his government. The process is likely to take weeks but aides made it clear that he is seeking a middle-of-the-road coalition with Labour and the newly emergent anti-clerical party, Shinui, which gained 15 seats.

His efforts will be complicated by the refusal of Labour’s new leader, Amram Mitzna, to join any government under Mr Sharon, insisting that he prefers to establish his party as a credible opposition. Labour officials said Mr Mitzna was yesterday deep in talks with his predecessors, Binyamin Ben-Eliezer and Shimon Peres, to persuade them to follow his line.

Many believe that Mr Mitzna will be ousted by rebels from within his own party, or forced into government by calls for national unity, especially if there is war in Iraq.

With nearly all the votes counted yesterday, the Sephardi ultra-Orthodox party, Shas, fell from 17 to 11 seats, the far- right National Union won seven, the National Religious Party and United Torah Judaism five each, the left-wing Meretz six, and the Russian immigrant party, Yisrael b’Aliyah, two, prompting its leader, Natan Sharansky, to resign from parliament.

It was clear that Mr Sharon’s two options are an alliance with Labour and Shinui, delivering a comfortable majority coalition of 71, or an unstable grouping of right-wing and religious parties.

The collapse of the Left was being put down yesterday to voters blaming their previous Prime Minister, Ehud Barak, for the eruption of Palestinian violence in September 2000 after the failure of negotiations at Camp David. Analysts said that voters had turned to Mr Sharon seeking a strongman capable of stemming a wave of suicide bombers and stuck with him despite his failure to bring them security.

Addressing the nation soon after his victory, Mr Sharon spoke of his desire to form a “national unity” coalition, and called on Israelis to unite against external threats. “The differences between us are dwarfed by the murderous hatred of the terrorist organisations,” he said.

Mr Sharon’s aides, buoyed by his achievement in doubling Likud’s vote and becoming the first Israeli Prime Minister to return to power since the 1980s, voiced confidence that Labour would eventually join a coalition.

Eyal Arad, his strategist, said: “We are in a war with the Palestinians, on the eve of a war with Iraq, and in the midst of an economic war that is worsening. It is irresponsible today to stand on the sidelines.”

Professor Gadi Wolfsfeld, a political scientist at Jerusalem’s Hebrew University, said that Mr Sharon faced the choice between a difficult-to-assemble Likud, Labour and Shinui coalition, or a right-wing grouping.

Mr Sharon wanted to ally with Labour and Shinui because he knew that becoming hostage to the far Right would alienate a White House pushing for a Palestinian state by 2005. But, he said, Mr Sharon could simply wait for the pressure to build on Mr Mitzna. “He’s in no hurry. He can just keep the Government he has now.”

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