Jerusalem (AFP) - Israel's defence minister resigned Friday, saying extremists had taken over the country, after he clashed with Prime Minister Benjamin Netanyahu over the army's handling of a wave of Palestinian violence.

Moshe Yaalon said he no longer had any trust in Netanyahu after the hawkish premier offered his post to a hardliner loathed by the Palestinians, in a bid to expand the governing coalition's majority.

"I told the prime minister this morning that due to his conduct in recent developments, and in light of my lack of trust in him, I am resigning from the government and Knesset (parliament) and taking a break from political life," Yaalon said on Twitter.

The surprise move by the respected former armed forces chief follows a series of disputes over the military's values and role in society between ministers in Netanyahu's government and top generals backed by Yaalon.

In an address broadcast after his initial announcement, Yaalon warned of a rising tide of extremism in the ruling Likud party and the country as a whole.

"Extremist and dangerous elements have taken over Israel and the Likud and are threatening (society)," he said in Hebrew.

He urged the "sane majority" of Likud voters as well as the rest of the nation "to realise the severe implications of the extremist takeover of the centre, and fight this phenomenon."

Former Labour prime minister and defence minister Ehud Barak went even further.

"The government of Israel has been infected by the shoots of fascism," the website of Israel's private Channel Two television quoted him as saying.

Yaalon's resignation came two days after former foreign minister Avigdor Lieberman said he could bring his far-right Yisrael Beitenu party into Netanyahu's governing coalition if a number of conditions were met, including his being named defence minister.

Netanyahu's Likud party pressed talks with Yisrael Beitenu on Friday on the terms of a deal to boost the coalition's wafer-thin majority in parliament.

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Netanyahu said he had wanted Yaalon to remain in government and take the foreign affairs portfolio but he "insisted" on retaining the defence post.

"I think that he should have continued to be a full partner in the governance of the state, in the post of foreign minister," Netanyahu tweeted.

"The change in distribution of portfolios was not a result of a crisis of trust between us. It was a result of the need to broaden the government in order to bring stability to the state of Israel in the face of the great challenges ahead of us," he added.

Yaalon had been an outspoken defender of the army's handling of an upsurge of Palestinian violence since last October in the face of criticism from hardline ministers and lawmakers.

He had also insisted on senior officers' right to "speak their mind" after deputy armed forces chief Major General Yair Golan enraged Netanyahu by comparing contemporary Israeli society to Nazi Germany.

- Sane and balanced voice -

Centre-left opposition lawmaker Merav Michaeli said Yaalon's departure deprived the country of a voice of moderation.

"We lost a sane and balanced voice in the dangerous and deranged right-wing government Netanyahu is leading," she said.

President Reuven Rivlin, known for having a difficult relationship with Netanyahu, said he was "greatly saddened" by Yaalon's resignation, which he called "understandable, and even appropriate" under the circumstances.

Ironically, Yaalon's resignation will move the Likud parliamentary party further to the right as his seat in parliament will be taken by religious hardliner Yehuda Glick, who is next on the party list.

The 50-year-old US-born rabbi is an outspoken campaigner for a change to rules governing Jerusalem's most sensitive site, the Al-Aqsa mosque compound, to allow Jews to pray as well as visit.

Palestinian fears that the government might be preparing such a change were one of the triggers for the wave of violence that erupted last year.

The expected return of Lieberman, who served as foreign minister under Netanyahu twice, is likely to raise international concern about his government's direction -- especially on the conflict with the Palestinians.

As defence minister, Lieberman, who lives in a Jewish settlement in the occupied West Bank, would oversee military operations in the Palestinian territories and have a major say in policy towards the settlements.

The international community considers the settlements illegal and regards their persistent expansion by successive Netanyahu governments as one of the biggest obstacles to peace.