Brussels - Israel must keep working towards a two-state solution in its conflict with the Palestinians, European Union foreign ministers insisted on Monday as an ultra-nationalist Israeli party looked set to join the country's future government.

"One would of course expect that a new Israeli government would respect the previous obligations: that includes the commitment to a two-state solution," Swedish Foreign Minister Carl Bildt said as he arrived in Brussels for regular talks with EU counterparts.

The EU's top diplomat, Javier Solana, backed that call, saying that the EU "will be ready to do business as usual normally with a government of Israel that is prepared to continue talking and will keep working for a two-state solution. If that is not the case the solution would be different."

Late on Sunday night Israel's right-wing Likud party, the group tasked with forming a new government, signed a coalition deal with the ultra-nationalist Israel Beiteinu party of Avigdor Lieberman, who would be foreign minister in such a coalition.

Lieberman was accused of racism in his election campaign, which focused on what he called Israeli Arabs' lack of "loyalty" to the state. In recent weeks he also agreed with Likud that the overthrow of the government of radical Islamist Palestinian group Hamas in the Gaza Strip should be one of the government's goals.

That call has alarmed EU diplomats, whose chief goal at present is to secure a permanent ceasefire between Hamas and Israel.

But Finnish Foreign Minister Alexander Stubb said the bloc would have to accommodate Lieberman if he is confirmed as foreign minister.

"We can and we must and we have to work with the next Israeli government, it's as simple as that. It takes two to tango, we have to get all the parties involved round the table, we can work with the new Israeli government as we did with the previous one," he said.

On Sunday evening, EU diplomats met Palestinian Foreign Minister Riad Malki and his Egyptian counterpart, Ahmed Aboul Gheit, to discuss the progress in reconciliation talks between Hamas and Fatah.

Malki warned that any Israeli government which rejected the two- state solution could only be described as "anti-peace." (dpa)