JERUSALEM (AFP) - Ultra-nationalist Avigdor Lieberman was sworn in as Israel's new defence minister after winning support in the cabinet and in parliament on Monday, ending weeks of political intrigue and outrage.

Prime Minister Benjamin Netanyahu's cabinet voted to expand his coalition and appoint Lieberman, before the 120-seat Knesset approved him by a vote of 55-43.

Netanyahu - who has been accused of forming the most right-wing government in Israeli history - was forced to resolve a last-minute dispute with another party in his coalition to see the move through.

The Knesset vote gives Netanyahu a 66-seat majority in the assembly.

Lieberman, a former foreign minister known for his provocative comments, has pledged harsh measures against Palestinian "terrorists" but has also promised to act in a "responsible" manner while in office.

He recently said he would give Ismail Haniya, the Hamas leader in Gaza, 48 hours to hand over two detained Israeli civilians and the bodies of soldiers killed in the 2014 war "or you're dead".

On Monday Netanyahu said "we will continue with a responsible and assertive security policy... and at the same time, will look for paths to peace, especially through regional developments, which we not only recognise but are also involved in".

Netanyahu's moves have drawn concern both inside Israel and abroad.

The United States has said the new coalition raises "legitimate questions" about the commitment of Netanyahu's government to a two-state solution with the Palestinians.

In the wake of the agreement, Environment Minister Avi Gabbay of the centre-right Kulanu party announced his resignation, saying: "I do not think it is right... to form an extremist government."

Before that, Lieberman's predecessor Moshe Yaalon, from Netanyahu's Likud, warned of a rising tide of extremism in the party and Israel as a whole when he resigned as defence minister on May 20.

However, Netanyahu's troubles also went beyond such criticism, with the vote to expand his coalition opening up previous fissures in his government.

The religious nationalist party Jewish Home had planned to vote against Lieberman's Yisrael Beitenu party in parliament, possibly sparking fresh elections, unless demands for procedural reform were met.

Jewish Home holds eight parliamentary seats, enough to block Netanyahu's new line-up.

Netanyahu and Jewish Home party leader Naftali Bennett reached a compromise on Sunday night.

It had demanded the creation of a military liaison position in the government's security cabinet, a smaller forum of cabinet members which decides on matters of national security.

Bennett says such a post is needed to avoid security cabinet members being kept in the dark about important developments, pointing to aspects of the 2014 conflict with Palestinian militants in Gaza, among other concerns.

Under the compromise brokered by Health Minister Yaakov Litzman of the United Torah Judaism alliance of ultra-Orthodox parties, security cabinet members will receive frequent personal briefings from the National Security Council as an interim measure as a committee of experts looks at ways to improve procedure.

While some analysts say such a change is needed, Bennett's demand is also seen as political manoeuvring ahead of the next general election, which is due by 2019 at the latest.

Bennett is widely seen as aspiring to replace Netanyahu, whose Likud party is currently the largest in parliament.

Also as part of the coalition changes, Yisrael Beitenu's Sofa Landver was approved as minister of immigrant absorption by the cabinet.

Veteran MP Tzachi Hanegbi, chairman of parliament's foreign affairs and defence committee and a member of Likud, is to become a minister without portfolio.