In an unexpected political manoeuvre, the Israeli prime minister, Benjamin Netanyahu, yesterday reversed plans for early elections after broadening his coalition by joining forces with Israel's biggest opposition party.

The move by Mr Netanyahu to team with the centrist Kadima party lends his right wing, pro-settler government a more moderate face. It could give him more legitimacy to make concessions to the Palestinians and pursue an aggressive approach towards Iran.

A spokesman for Mahmoud Abbas, the president of the West Bank-based Palestinian Authority, expressed hope that the new coalition could help break the deadlock in talks. Nabil Abu Rudeina also said Israel "should seize the occasion of the enlargement of the coalition to speed up the achievement of a peace deal".

The pact also hands him a robust coalition that will include 94 of a total of 120 parliamentary members, making his government - one of the largest in the country's 64-year history - less vulnerable to collapse if any of its partners drop out.

The deal between Mr Netanyahu and Kadima leader, Shaul Mofaz, surprised many political observers because it emerged just two days after the premier called for new elections in September - more than a year ahead of schedule - partly due to the growing possibility that some of his coalition partners could quit.

"It's a big bombshell," said Gadi Wolfsfeld, a professor of politics and communications at the Interdisciplinary Centre in central Israel. "In hindsight, the reason is clear: For Netanyahu, he can stay in power and have little opposition in parliament. For Mofaz, he gets to save his party from its likely destruction in a September election."

Analysts said Mr Netanyahu had initially called for a new election partly because his coalition was mired in disputes between parties over the exemption of ultra-Orthodox men from the military as well as over court orders to dismantle settlement outposts in the West Bank.

Mr Netanyahu said: "The state of Israel needs stability. I originally wanted to go on until the [originally scheduled] elections, but called for [early] elections when I saw that stability being undermined."

Now, the head of the hardline Likud party, will remain in power until the end of his term next year. He will head a coalition that includes both right wing and centrist parties - the latter being mainly Kadima, which has 28 parliamentary members, more than the Likud's 27 legislators.

The broader government, analysts said, will give him more public legitimacy to take military action against Iran, an option he has floated as a necessity should international sanctions fail to curb the Islamic republic's nuclear ambitions.

The larger coalition, especially now that it includes the biggest centrist party, may also allow him to make more significant efforts in peace talks with the Palestinians without fearing that pro-settler partners may prompt his government's collapse, analysts said.

Indeed, Mr Netanyahu said yesterday that the agreement with Kadima includes an attempt to conduct a "responsible" peace process, which has been at a stalemate since September 2010 amid a dispute over Jewish settlements in the Israeli-occupied West Bank.

"Until now, Netanyahu could make little moves in the peace process because his coalition was too right wing," said Uriel Abulof, a political scientist at Tel Aviv University.

Mr Mofaz, a former military chief and defence minister, has repeatedly urged a renewal of talks with the Palestinians and even made a controversial call in 2009 for Israel to conduct negotiations with Hamas, the Islamic group that Israel views as a terrorist organisation.

Mr Mofaz, who replaced the former foreign minister, Tzipi Livni, as head of Kadima in March, sought the pact with Mr Netanyahu following opinion polls last week showing his party's parliamentary seats may drop to as little as 10 from the current 28.

For Mr Netanyahu, there was both praise and condemnation at home yesterday. Opposition leaders such as Shelly Yechimovich, the head of the centrist Labour party, called the agreement "the most ridiculous zigzag in Israel's political history".

However, some commentators who criticised the premier for deceiving the public by conducting secret talks with Kadima even as he called for new elections praised him for an effective political move.