JERUSALEM (AFP) - Prime Minister Benjamin Netanyahu's main challenger in March 17 elections, the centre-left Zionist Union, unveiled its platform Sunday with an emphasis on ending Israel's "diplomatic isolation".

Its two planks for the legislative polls are "to end the diplomatic isolation of Israel" and halt the rising cost of living, the alliance between the Labour party of Yitzhak Herzog and Tzipi Livni's centrist HaTnuah said in a statement.

The Zionist Union said it would rely on Arab League support for a meaningful resumption of peace talks with the Palestinians that ground to a halt in 2013.

It proposes "demilitarisation of the Palestinian state", major Jewish settlement blocs in the West Bank to stay under Israeli sovereignty, Jerusalem to remain "the eternal capital of the Jewish people", and increased economic cooperation with the Palestinians.

Herzog and Livni also called for a restoration of warm ties with the United States, Israel's key ally but with whom ties have frayed over Iran's nuclear programme.

On the socio-economic front, the Zionist Union would increase the education and health budgets and create a housing committee to cap rent rises.

Herzog, at a news conference, charged that Netanyahu's rightwing Likud bloc lacked vision and policies for the future.

"Israel needs a leader who doesn't just insist on what causes fear. Israel needs a leader who brings a vision," said Livni, who is supporting Herzog's challenge for the prime minister's job.

Opinion polls show Likud and the Zionist Union running almost neck-and-neck.

But political analysts say Netanyahu is better placed to form a parliamentary majority with support from ultra-nationalist and ultra-Orthodox parties, or the two main blocs could form a unity government in case of a dead heat.