The new Israeli coalition government between Benjamin Netanyahu and right-wing Bayit Yehudi (Jewish Home) party is a "racist, discriminatory" government of war, according to chief Palestinian negotiator Saeb Erekat.

The 61-member government was struck at the 11th hour between election winner Likud and the pro-settler platform of Naftali Bennett, who demanded the justice ministry in return for support from his eight members of Knesset (MKs).

Bennett, who will serve as education minister in Netanyahu's government, opposes the establishment of a Palestinian state and backs the expansion of settlement in the occupied West Bank - which are considered illegal under international law. The shaky, unstable coalition will govern with just one vote majority in the 120-seat parliament.

"Congratulations Israel, your new government has ensured that peace is not on their agenda," he continued. "This new right-wing, extremist government is not a partner for peace when the leaders call for the annexation of Palestinian land, forcible transfer of the Palestinian population, and the genocide against our people."

The genocide reference is to the new minister of Justice from Bayit Yehudi, Ayelet Shaked, who was accused of openly calling for the mass killing of Palestinians in a Facebook post during the Israeli offensive on Gaza in the summer of 2014. The post was an excerpt in Hebrew from an article by right-winger Uri Elitzur allegedly comparing Palestinian children to "little snakes" and urging Israel to declare war on the entire Palestinian people.

Later, Shaked wrote an op-ed in the Jerusalem Post disputing the English translation of her post made by The Daily Beast, which wrote the original article on the issue, and claiming that the words were cherry picked out of context.

"This vilification was later picked up by several bloggers and reporters, all of whom were convinced of this frightening notion, without even a scrap of fact or truth," she wrote.

Netanyahu has also secured deals with three parties: the centrist Kulanu and two ultra-Orthodox parties, United Torah Judaism (UTJ) and Shas.

Foreign minister Avigdor Lieberman, a former ally, said that his Yisrael Beitenu party would not join the coalition. He had complained that the new coalition was not nationalist enough and said he could not live with concessions to the military draft to the ultra-Orthodox.

Erekat said the fresh government "will be one of war which will be against peace and stability in our region".

"With the dust beginning to settle on the new Israeli coalition government, the face of a new form of racist, discriminatory Israel has been revealed," Erekat said.