Netanyahu reaches first deal on new Israel government: source

Israel's Prime Minister Benjamin Netanyahu addresses a meeting of the Jewish Agency's Board of Governors in Jerusalem February 18, 2013.

JERUSALEM (Reuters) - Israeli Prime Minister Benjamin Netanyahu took his first step in forming a new government on Tuesday by reaching a coalition deal with former Foreign Minister Tzipi Livni, a political source said.

A draft copy of a five-page coalition deal, obtained by Reuters, said the centrist Livni would be named Justice Minister and would also resume a role similar to one she held in a previous government as a peace negotiator with the Palestinians.

Peace talks have been frozen since 2010, and the coalition deal said Netanyahu and Livni together would "work, upon the establishment of the new government, toward resuming the diplomatic process".

The deal would be the first for Netanyahu after weeks of negotiating with party heads since his right-wing Likud won a January 22 election, but came up short of a parliamentary majority.

Likud said in a statement the two party leaders would make a joint announcement in parliament later on Tuesday. A Likud source, speaking on condition of anonymity, told Reuters Livni had agreed to join Netanyahu's new government.

Netanyahu has another month to secure enough coalition partners to control at least half of the 120 seats in parliament. Likud, running on a joint ticket with another right-wing party, won 31 seats in the vote. Livni heads a small centrist party that won six.

(Reporting by Allyn Fisher-Ilan and Ari Rabinovitch; Editing by Tom Pfeiffer)