Prime Minister Binyamin Netanyahu and Yisrael Beytenu party leader Avigdor Liberman formally announced Wednesday morning the coalition deal reached between their two parties, at a Jerusalem press conference.

The one-time allies and one-time enemies appeared in good spirits, with Yisrael Beytenu's inclusion in the government expanding its majority from a wafer-thin 61 seats to a far more manageable 66.

In return, Liberman will be appointed defense minister, while compromises regarding the death penalty for terrorists and pensions reforms were also reached. Yisrael Beytenu will also receive the Immigration and Absorption Ministry, current held by Likud's Ze'ev Elkin.

Speaking at the press conference, Netanyahu once again repeated how "since the start of the government last year, I expressed time and time again my intention to expand" the coalition.

Welcoming Liberman and his party as "important partners," the PM expressed confidence that his newest coalition partner's "extensive experience" would be a benefit "for the security and safety of the citizens of the state of Israel."

Netanyahu also addressed the harsh words and insults exchanged between the two prior to coalition talks, with Liberman once branding the prime minister a "coward," and Netanyahu dismissing him as someone unqualified to even serve as a military correspondent, let alone defense minister.

"In the heat of the moment things were said between us which didn't need to be expressed; now we are joining hands to take Israel forward," he said.

"I as prime minister, together with Avigdor Liberman as defense minister...will continue to protect the security of Israel," he continued.

Netanyahu also called once again to Zionist Union leader Yitzhak Herzog to join a "true unity government," challenging him to make good on his own calls to "seize the unique opportunity" of achieving a regional peace agreement.

"My government remains committed to pursuing peace with the Palestinians, to pursuing peace with all of our neighbors," he said - a mission which he emphasized would be greatly aided via a "larger, more stable government." 

A jovial Liberman struck a similar tone, hailing their "new-old" partnership, while seeking to dispel criticisms of his past comments. 

"All of Israeli society will benefit" from the coalition deal, he declared, vowing to pursue "responsible, reasonable policies" as part of a "stable coalition."

Ironing out the details

Earlier, Tourism Minister Yariv Levin (Likud), who has managed the coalition talks with Yisrael Beytenu, welcomed the agreement on Wednesday morning.

"Overnight we succeeded in reaching final agreements on matters that were left in disagreement between the Finance (Ministry) and Yisrael Beytenu. This is an agreement that will benefit all citizens of the state, and I welcome it," said Levin.

"The expansion of the government, with the addition of the Yisrael Beytenu party to the national coalition, is an important and necessary step that will ensure the stability of the coalition and the continued activities of the government according to its path."

Wednesday's official signing of the deal comes after the coalition agreement was finalized during an overnight meeting between Netanyahu, Liberman and Finance Minister Moshe Kahlon (Kulanu) at Netanyahu's office in Jerusalem.

The issue of contention between the parties was Liberman's demand for additional pensions for new immigrants, which the Finance Ministry refused due to its sectarian nature.

However, reports in Israeli media overnight Tuesday said that the sides agreed that the outline will apply to all seniors, not just those who immigrated from the former Soviet Union, and the funding will be 1.4 billion shekels ($363 million) annually.

"These are the two major issues that are important to our constituency, and significant achievements," Lieberman's spokesman told AFP, referring to the pension reform and Liberman's appointment as Defense Minister.

Due to the delay in signing the coalition agreement, Liberman's swearing in as Defense Minister will be delayed and will not take place this week.

Even as he brings in Liberman, Netanyahu is facing another coalition crisis from Education Minister Naftali Bennett's Jewish Home party, after Bennett issued an ultimatum conditioning his support of Yisrael Beytenu's entry on several amendments to the Security Cabinet.

After a critical report on the functioning of the cabinet Bennett called for a defense secretary to be appointed to each minister to update them, and also called for easier access to sensitive intelligence information.

It is unclear whether this issue has been resolved.