Jerusalem: Israel's Labour-Likud coalition collapsed on October 30 when Foreign Minister Shimon Peres and Labour Party chief and Defence Minister Benjamin Ben-Eliezer quit dashing efforts to end a crisis in the 18-month-old alliance.

As a meeting between Prime Minister Ariel Sharon and Ben-Eliezer failed to clinch a deal to stave off the crisis over the 2003 budgetary allocation for Jewish settlement in the West Bank and Gaza strip, Defence and Foreign Ministers resigned which effectively means that the Labour Party would leave the government.

"The national unity government collapsed and no one knows why," Finance Minister Sylvan Shalom said.

Meanwhile, Culture Minister Matan Vilnai quit from the coalition government after the talks on budget failed.

The Labour's exit from the government, however, will not bring down Sharon's government but the Prime Minister will be forced to rely on the far-right, or ultimately call early elections.

The major sticking point in negotiations was $ 147 million earmarked for the Jewish settlements, which Likud party favoured while Labour party wanted the money diverted to social services benefiting pensioners, one-parent families, students and low-income locales.

Labour had threatened to vote against the budget and resign if the government did not cut 145 million in allocations to Jewish settlements in the West Bank and Gaza Strip.

PTI