His party didn't do as well as expected, coming fourth in Israel's recent parliamentary election, but Naftali Bennett, leader of the Jewish Home party, has done his settler supporters proud, emerging as a big winner in the scramble for power in the newly formed coalition government assembled by Prime Minister Benjamin Netanyahu.

Coming just ahead of a visit by U.S. President Barack Obama, and contrary to what the White House may be hoping for, the hard-line nature of the new government shows how difficult it will be to make any inroads toward a Palestinian state.

At a time when the future of Israel's settlements in the West Bank will likely be determined, Mr. Bennett, a dot-com millionaire who breathed new life into the former National Religious Party, has been given control of the portfolios and parliamentary positions that matter most to the controversial settler communities.

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The party has been given the Housing and Industry ministries as well as chairmanship of the Knesset's powerful finance committee, from which funding for settlements would come.

For Israel's settlers, "it's a dream come true," says Yossi Verter, a veteran political commentator at Haaretz.

Even the new Defence Minister, Moshe Yaalon, a member of Likud and former military chief of staff, is a favourite of the settlers. He opposed even the temporary settlement freeze implemented by the Netanyahu government three years ago and, as the primary peacekeeper on the West Bank, is expected to have a much warmer relationship with the settlers than his predecessor, Ehud Barak.

The coalition of four political factions will have 68 seats in the 120-seat Knesset. The largest new member, second in size only to Mr. Netanyahu's 31-seat Likud-Beitenu alliance, will be the Yesh Atid party, led by the charismatic Yair Lapid, with 19 seats.

The former television host also got from Mr. Netanyahu a lot of what he asked for in the six weeks of negotiations, primarily in the form of policy changes directed at the country's Haredi (ultra-Orthodox) community.

For starters, neither of the Haredi political parties, Shas and United Torah Judaism, is to be included in the new government – only the third time in 36 years they've found themselves on the outside looking in.

Mr. Netanyahu has broadly accepted Mr. Lapid's agenda for reducing the controversial benefits enjoyed by the Haredim, the principal plank on which Mr. Lapid campaigned.

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The Prime Minister has agreed to submit to the Knesset a bill for universal military service even before the government submits the overdue state budget. Recent practices have allowed wholesale exemptions from military service to Haredi men enrolled in religious schools. Mr. Lapid, joined by Mr. Bennett, intends to end that practice.

The Yesh Atid leader also secured agreement that the state will take extensive financial steps to integrate the ultra-Orthodox into the work force. At present, most Haredi men do not work outside school and rely on government benefits to provide for their families.

As well, the agreement signed by the Prime Minister calls for a new curriculum that includes math, science and English to be introduced at all schools, including religious schools.

To help ensure these new policies are implemented, Mr. Lapid's number two, Shai Piron, a modern Orthodox rabbi, will be Education Minister.

Mr. Lapid, who will be Finance Minister, can look on his gains with satisfaction but, in pursuing his goal of bettering the quality of life of middle-class Israelis, he, too, may play second fiddle to the country's settlers. Yes, he may be able to deliver on low-cost housing as he vowed, but the Jewish Home party's control of the finance committee and other levers of power could well mean that those apartments will end up being built on the other side of the green line, as part of settlements in the West Bank.

And while former foreign minister Tzipi Livni, who will be Justice Minister in the new government, is to be put in charge of negotiations with the Palestinians, she's not likely to get very far.

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The governing Likud-Beitenu alliance is comprised mostly of members of Knesset who oppose a two-state solution to the conflict and Mr. Bennett's Jewish Home party is strongly pro-settler.

Even Mr. Lapid 's party, while endorsing peace talks, is more concerned with quality-of-life issues for Israelis.

The presence of the relatively moderate Ms. Livni may give the new government a broad-based look, but the six parliamentary seats of her centre-left Hatnuah party give her very little leverage in pushing the coalition to accept any kind of serious negotiations.

Even if she were to threaten resignation, it wouldn't have much effect. The loss of her seats would leave the coalition with 62, still a majority.

Rather, it is Mr. Bennett, with 12 seats, who will have the veto over any peace deal-making he and his settlers don't approve.