Israeli bill may help Netanyahu meet U.S. demands

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu won preliminary parliamentary approval on Monday for a bill that could help his right-wing coalition meet U.S. demands it rein in Jewish settlement construction.

The measure would make it easier to split the opposition centrist Kadima party into separate factions any of which could opt to join Netanyahu's four-month-old government.

The bill's approval on a first reading in parliament came as the U.S. Middle East peace envoy George Mitchell visited in search of a formula to halt settlement building in land Israel captured in a 1967 war so stalled peace talks may resume.

Netanyahu has so far run a collision course with U.S. President Barack Obama's demands to freeze settlement construction so as to renew Israeli talks with the Palestinians.

Netanyahu's coalition now has a solid majority of 74 in the 120-member parliament, but more than a couple of dozen fall in the pro-settler category and could be expected to oppose any deal to halt settlement activity in the occupied West Bank.

Once it passes two more votes expected to be held later this week, the measure approved on Monday by a vote of 62 to 47 would permit parties to break up into smaller factions than currently allowed.

In the case of Kadima, some of whose members headed by former defense minister Shaul Mofaz, are closer politically to Netanyahu than moderate Kadima leader and former foreign minister Tzipi Livni, such a law would permit just seven to bolt the faction and possibly team up with the rightist leader.

SUMMER RECESS

Under current legislation, no fewer than a third of party members may break away, which in Kadima's case means a minimum of 10 lawmakers.

Mofaz himself joined Kadima members in voting against the bill and denounced it as "anti-democratic," joining a host of critics from across the political spectrum who accused Netanyahu of acting too hastily in amending a constitutional law.

Mofaz also insisted in a television interview with Israel's Channel 2 he would prefer to challenge Netanyahu for the premiership, but added that Livni had erred in refusing to join the Israeli ruling coalition after a February election.

Livni, convening a meeting on the vote, called Netanyahu's legislation an embarrassment that displayed weakness and accused him of "looking for spare parts after just four months in office."

Kadima lawmakers vowed to filibuster the measure though it was unclear whether they could succeed and prevent its passage before parliament breaks for summer recess next week.

Netanyahu has already sought to extend the session to hold a vote early in August on a land ownership privatization bill on which he has staked his reputation, but pulled from parliament's agenda when he fell shy of a majority last week.

(Editing by Ralph Boulton