Israel was today poised for its most right-wing government in decades after Binyamin Netanyahu was asked to be the country's next Prime Minister.

In a move that will cause huge disappointment in Washington, President Shimon Peres confirmed that he had asked the Likud leader, who finished a close second in the country's election, to build a coalition.

Giving an acceptance speech that did not mention the stalled Israeli-Palestinian peace process or a two-state solution, Mr Netanyahu instead placed much of his focus on Iran's enrichment of uranium.

"Iran is seeking to obtain a nuclear weapon and constitutes the gravest threat to our existence since the war of independence," Mr Netanyahu said at President Peres’s official residence.

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The UN announced yesterday that Iran has enriched sufficient uranium to amass a nuclear bomb – a third more than previously thought.

Referring to the Iranian-backed Hezbollah movement in south Lebanon, Mr Netanyahu said: "The terrorist forces of Iran threaten us from the north. For decades, Israel has not faced such formidable challenges.

"The responsibility we face is to achieve security for our country, peace with our neighbours and unity among us."

Despite being narrowly defeated by Tzipi Livni, of the centrist Kadima party, Mr Netanyahu was judged by Mr Peres to have a significantly better chance of building a viable coalition after he won the backing of Avigdor Lieberman's ultra-nationalist Yisrel Beitenu party, which finished third in the national poll.

The President said that 65 out of 120 parties in Israel's Parliament, the Knesset, backed Mr Netanyahu.

The Likud leader used his speech to make a final plea for Ms Livni and Ehud Barak, leader of the centre-left Labour party, to go back on their decisions not to join the coalition – a last-ditch move to prevent the formation of one of Israel's narrowest ever governments whose long-term credibility will be called into question.

"I call on Kadima chairwoman Tzipi Livni and Labour Party chairman Ehud Barak and I say to them – let’s unite to secure the future of the State of Israel," he told reporters.

"I ask to meet with you first to discuss with you a broad national unity government for the good of the people and the state."

Yet Ms Livni appeared to have ruled out joining Mr Netanyahu's government, saying that she would not support a leader who would prevent progress in building a permanent peace with the Palestinians. Mr Barak, whose Labour movement turned in one of its worst ever showings, has already declared that it should go into opposition to rebuild itself.

"I will not be able to serve as a cover for a lack of direction. I want to lead Israel in a way I believe in, to advance a peace process based on two states for two peoples," Ms Livni said, after her final meeting with Mr Peres.

This would leave Mr Netanyahu relying on Mr Lieberman, who has advocated deporting Arab Israelis who fail to swear an oath of loyalty to the state, and the ultra-orthodox Shas party.

Mr Lieberman, a staunch secularist, is likely to clash with Shas' religious leadership over funding for religious institutions and civil marriages, which Mr Lieberman is trying to promote and which Shas opposes.

A similar coalition, formed by Mr Netanyahu in 1996, lasted only two years before collapsing after right-wing parties withdrew their support following territorial concessions to the Palestinians.

The new administration would also run into immediate conflict with US President Obama who has urged a speeding up of the peace process and has tried to cool hostile rhetoric with Iran.

Instead of territorial compromise, Mr Netanyahu has indicated that he prefers economic development measures in the West Bank that allow Israel to maintain continued security control over borders and no dismantling of settlements.

Those policies led Mahmoud Abbas, the moderate Palestinian President, to threaten a complete freeze in relations with Israel – a move that would be disastrous for the West, which has pumped billions into the West Bank in order to prop up his authority.

“We will not deal with the Israeli government unless it accepts a two-state solution and accepts to halt settlements and to respect past accords,” Nabil Abu Rudeina, President Abbas's spokesman, said.

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