Israeli Prime Minister Benjamin Netanyahu's new rightwing religious "government of war" is a blow to an already stagnating peace process, Palestinians said Thursday, vowing to fight it on the international stage.

The Palestine Liberation Organization blasted Israel's "extremist" cabinet, after Netanyahu announced a coalition government that gave him a slim parliamentary majority and included ministers who oppose the internationally-sanctioned two-state solution.

After reaching a late-night deal on a new coalition, Israel's Benjamin Netanyahu signed an agreement Thursday giving a senior role to the far-right Jewish Home that firmly opposes a Palestinian state.

Following six weeks of intensive negotiations, the Israeli premier finally managed to forge a government late on Wednesday, just an hour before a legal deadline. Had he failed, he would have forfeited his position as premier.

A top Palestinian official on Sunday accused Israel of trying to topple the Palestinian Authority by continuing its freeze on millions of dollars in crucial tax monies. 

Israeli plans for roughly 500 new settler homes in occupied east Jerusalem are a "slap in the face" of the United States and the international community, a top Palestinian official said.

Israel approved construction of the homes on Monday as chief Palestinian negotiator Saeb Erakat met U.S. Secretary of State John Kerry in the United States, according to settlements watchdog Peace Now.

A senior Palestinian official on Tuesday likened Benjamin Netanyahu to the leader of the Islamic State group, after the Israeli prime minister compared Hamas to the jihadist organization.

"Netanyahu is trying to disseminate fear of the Islamic State led by Abu Bakr al-Baghdadi, but Netanyahu forgets that he himself leads the Jewish state," said Saeb Erakat, the Palestinians' chief negotiator in peace talks with Israel.

A senior Palestinian official has called for international action against Israel over the detention without charge of more than 100 Palestinians who have been on a long-term hunger strike.

"I am writing on behalf of the Palestine Liberation Organization and President Mahmud Abbas to request your immediate intervention on behalf of the approximately 130 Palestinian detainees and prisoners currently on hunger strike in Israeli prisons," Saeb Erakat said in a letter obtained by AFP Wednesday.

Israel's security cabinet was to meet on Thursday morning to weigh its response to a unity deal struck between the Palestinian leadership and the Hamas rulers of Gaza.

Prime Minister Benjamin Netanyahu reacted angrily to Wednesday's agreement between the rival factions accusing Palestinian president Mahmoud Abbas of choosing "Hamas, not peace".

Israeli and Palestinian negotiators are to meet again Wednesday with U.S. mediator Martin Indyk in a bid to try and save the peace process from crumbling, a Palestinian official said.

Indyk would travel to the region to oversee the meeting, the second three-way talks since last Thursday, said the official who requested anonymity.

Israeli and Palestinian negotiators met on Sunday in a fresh bid to save their teetering U.S.-brokered peace talks, a Palestinian official said.

Chief Palestinian negotiator Saeb Erakat was meeting in Jerusalem with his Israeli opposite number, Justice Minister Tzipi Livni, and Prime Minister Benjamin Netanyahu's special envoy Yitzhak Molcho, he told Agence France Presse.

Israeli and Palestinian negotiators will meet jointly Sunday with U.S. envoy Martin Indyk, as attempts continue to prevent the collapse of peace negotiations, officials close to the talks said.

The first three-way meeting since Wednesday comes as Washington reviews its push for a peace deal after a spiral of tit-for-tat moves by Israel and the Palestinians took hard-won negotiations close to collapse.