Hatnuah became the first party to sign a coalition deal with Likud-Beytenu on Tuesday. The deal was reached after 10 days of negotiations and numerous secret meetings between Hatnuah leader Tzipi Livni and Prime Minister Benjamin Netanyahu.

Under the terms of the agreement, Livni will be appointed justice minister and will also be given the authority to conduct diplomatic negotiations on behalf of Netanyahu.

"Habayit Hayehudi Chairman Naftali Bennett was given the opportunity to be the first to sign [a coalition deal], but he missed it," Likud-Beytenu officials said on Tuesday.

At a joint press conference with Livni on Tuesday, Netanyahu said "the State of Israel needs a broad national unity government and our agreement is the first step in this direction."

"The country is facing enormous challenges, some of which are unprecedented," Netanyahu said. "The threats from Iran, Syria and Hezbollah do not stop for a moment. To address these threats, we need a broad and stable government that unites the people."

"We must make every effort to advance a responsible peace process with the Palestinians," Netanyahu said.

Livni said that she and Netanyahu have agreed to put past differences behind them.

"We had long talks and we reached understandings," Livni said.

Speaking to Army Radio on Wednesday, Livni said that she had not betrayed her party's voters by making a deal with Netanyahu.

"I said during the campaign that the government's policies over the past four years were wrong, that I would fight to promote the peace process and that I would decide whether or not to be in the government based on my understanding of where I could best promote the peace process, and this is what I did," Livni said.

According to the coalition deal, Hatnuah will also receive the Environmental Protection portfolio. It appears that Amir Peretz, who met with Netanyahu on Friday in Jerusalem, will be given that ministerial post. If that happens, Peretz, who is No. 3 on the Hatnuah list, would jump over Amram Mitzna, No. 2 on the list.

The deal also stipulated that a team of ministers, led by Netanyahu, will be established to manage the peace process with the Palestinians. In addition to Netanyahu, the team will include the justice minister (Livni), defense minister and foreign minister.

Likud-Beytenu officials believe that more coalition deals will be signed in the coming days, likely with Shaul Mofaz's Kadima party and the haredi Shas and United Torah Judaism parties. Mofaz, who was set to meet with Netanyahu on Wednesday, will likely receive either the Strategic Affairs or Intelligence portfolios.

Meanwhile, there is growing belief that Moshe (Bogie) Ya'alon will be named the next defense minister.

Other political parties on Tuesday criticized the Hatnuah coalition deal, saying that both Hatnuah and Likud-Beytenu had broken campaign promises by allying with each other. The harshest criticism was reserved for Peretz, who left Labor for Hatnuah after Labor leader Shelly Yachimovich wouldn't commit to staying out of a Netanyahu-led government.

Meretz Chairmwoman Zehava Gal-On attacked Livni, saying the deal with Netanyahu was a "slap to the cheek of Center-Left voters. [Hatnuah] stole their votes and gave them to the Right."

Habayit Hayehudi castigated Likud-Beytenu, saying that "in contrast to pre-election promises, Netanyahu is not establishing a government based on the nationalist camp. The agreement with Livni, who led the disengagement process [from the Gaza Strip], will make it tough for us to join the coalition."

In response, Likud-Beytenu said "as written in the agreement signed with Hatnuah, the prime minister is the person who will lead the ministerial team that will manage the diplomatic process."

A Likud-Beytenu official said that "Habayit Hayehudi has only itself to blame. It was offered a proposal to be the first partner to enter the government. Instead of joining the government and giving a majority to the nationalist camp, [Habayit Hayehudi] clung to Lapid, who strongly supported the disengagement [from Gaza]."

On Wednesday, an aide to Palestinian Authority President Mahmoud Abbas welcomed the news of Livni receiving authority to conduct diplomatic negotiations, calling it a positive sign.

"She has the knowledge and experience required of the peace process and she knows the Palestinian side's point of view on the solution," Nimer Hamad said about Livni.

Intense coalition talks were held between Shas leaders and Likud-Beytenu negotiators on Tuesday. A Shas official said that progress in the talks is expected in the coming days, but a deal likely won't be reached before the Purim holiday, which starts on Saturday night. The same official believes that Shas will join the coalition before Bennett.

Shas leader Aryeh Deri met with Histadrut Chairman Ofer Eini on Tuesday in an effort to convince Eini that the Labor party should join the coalition.