The question now is whether Netanyahu will form a coalition with his centrist rival, Kadima Party leader Tzipi Livni.

His choice will have serious ramifications for the Mideast peace process.

Peres made his announcement early Friday afternoon after holding meetings with Netanyahu and Livni. An official ceremony appointing Netanyahu was to be held shortly afterward.

Peres had been meeting political leaders as he decided which candidate would be given the task of forming a new coalition in the aftermath of Israel's national election last week.

The choice of Netanyahu was cemented on Thursday when Avigdor Lieberman, who heads the right wing Yisrael Beiteinu (Israel Our Home) party, endorsed the Likud leader.

Kadima edged out Likud in the election, capturing 28 seats to Likud's 27. But Likud is in a better position to put together a coalition because of gains by Lieberman and other hard-line parties.

This could set Israel on a collision course with the U.S., the Jewish state's top international patron, and its new president, who has vowed to make Mideast peace a top priority.

Netanyahu's has made his position clear on the peace process no land concessions that will further endanger Israeli lives.

Source: AP, JPostonline