Israeli PM Ehud Olmert has met his main coalition partner to discuss a deal allowing a right-wing party, Yisrael Beitenu, to join the government.
Mr Olmert is broadening his coalition in the wake of the Lebanon conflict
Reports say Mr Olmert and the Labour leader, Amir Peretz, were expected to discuss terms under which Labour would stay in the reshaped government.
The terms are believed to include proposals for improving benefits for Arab citizens of Israel.
Israeli Arabs condemned the plan to let Yisrael Beitenu into the coalition.
Yisrael Beitenu, which is led by Avigdor Lieberman, advocates the transfer of some Arab towns out of the state of Israel.
Mr Lieberman has also accused some Israeli Arabs of treason for speaking to the Palestinian militant group, Hamas.
Azmi Bishara, an Israeli Arab member of the parliament, said: "Israel can't pride itself for being the sole democracy in the Middle East and take in someone so radical [as Mr Lieberman]."
"World governments should boycott the Israeli government over Lieberman as well as its policies against the Palestinians."
Correspondents say that Mr Olmert has decided he needs to broaden his coalition and ensure his political survival in the wake of what is widely seen as a debacle in Lebanon.
For the Israeli government, the inclusion of Yisrael Beitenu in the governing coalition will be a significant move to the right less than seven months after the general election seemed to strengthen the centre of Israeli politics.
But there is no immediate sign this will bring a change of policy.