It remains unclear which portfolio Levy will assume, with the finance or national infrastructure ministries current possibilities.

The infrastructure portfolio was given up recently by Ariel Sharon when he was named foreign minister in place of Levy, who resigned from the government in January over much-publicized disagreements with Netanyahu, his old political rival.

Under the emerging deal, Levy's Gesher Party, which is a breakaway from Likud, would be reintegrated into the party, gaining several hundred seats within Likud's Central Committee.

In addition, the state budget, which is still up for final Knesset approval, would reflect social spending issues — the very issues whose lack of implementation in the present budget spurred Levy's resignation from the coalition earlier this year.

Netanyahu touted the reunion with Levy and his Gesher party, announced Wednesday, as a way to widen the coalition base for implementation of the Wye accord.

But reaction to the move was mixed.

Defense Minister Yitzhak Mordechai welcomed it as a step that would strengthen the coalition.

But Communications Minister Limor Livnat said the emerging deal with Gesher would weaken Likud, adding that the party should not bend over backward and lose its identity in order to bring Levy and Gesher in.

Knesset member Ze'ev "Benny" Begin, one of Netanyahu's harshest critics, strongly objected to the deal, but said that the demise of the Likud was already under way.

The Likud Party, Begin told Israel Radio, has "turned into a tool of the Labor Party's plans. It is an unimportant, uninteresting, irrelevant party that is swayed by events and polls."

Commenting on the various opponents of the move, Levy said Netanyahu should do some housekeeping within Likud.