The former Israeli foreign minister, Mr David Levy, said yesterday he would be back as foreign minister when the Prime Minister-elect, Mr Ehud Barak, presents his government to parliament on Wednesday, and Palestinians welcomed the appointment.
The dovish Mr Levy resigned 18 months ago as foreign minister under the right-wing Prime Minister, Mr Benjamin Netanyahu, accusing him of leading peace moves nowhere and doing little for the working class that Mr Levy said he championed.
Mr Levy (61) said Mr Barak, the Labour Party leader, agreed that together they would direct Israel's peace policy.
Mr Barak, with Mr Levy as part of his new One Israel faction, defeated Mr Netanyahu in the general election on May 17th.
Asked if he would be foreign minister, Mr Levy told Israel Radio he and Mr Barak "agreed on this. He informed me of this, that at no moment did he ever doubt it."
Mr Levy said: "The prime minister makes the policy and the foreign minister carries it out."
Mr Nabil Amr, Palestinian minister of parliamentary affairs, said: "The Palestinian Authority welcomes Mr Levy's appointment as foreign minister and it is encouraging because it means the new government will have more positive positions.
"Levy holds views and positions that would advance the peace process and he sacrificed his job under Netanyahu in order to influence the process towards progress."
Mr Barak, a former army chief who is due to present his cabinet to the Knesset on Wednesday, is expected to dictate foreign policy. He will also hold the defence portfolio.
Mr Barak held marathon talks yesterday with senior Labour figures over how to divide up ministries left for the party after the distribution of portfolios to six coalition partners.
With the foreign ministry apparently in Mr Levy's hands, speculation centred over who would receive the finance post.
The Tel Aviv Stock Exchange lost more than 1.5 per cent on media reports that Mr Abraham Shohat, who was a fiscally loose finance minister between 1992 and 1996 and tried to impose a tax on capital gains, was a leading candidate for the post.
Mr Shohat could not confirm the post was his, with the portfolio also reportedly offered to Mr Shlomo Ben-Ami, a former ambassador to Spain.
The Moroccan-born Mr Levy, a perceived vote-getter with Israel's large Sephardic Jewish community from Arab countries, was a loyal campaigner for the new Israeli leader.
It will be Mr Levy's third time as foreign minister even though he cannot speak the language of Israel's closest ally, the US - he speaks Hebrew and French but little English.
Critics say the former building worker does more to help himself than the working-class majority he champions. But many credit him with nudging Israel towards peace with the Arabs.
Mr Levy, who in the past has swung left and right to take every political opportunity, has spoken out most recently in favour of swapping land for peace with both Palestinians and Syria.