Israel has postponed the swearing-in of its long-awaited unity government, which had been set for Thursday, following a request for a three-day delay by Prime Minister Benjamin Netanyahu.

After more than 500 days in limbo, three inconclusive elections in less than a year and a power-sharing agreement between Netanyahu and former rival Benny Gantz, it appeared the country's unprecedented political crisis had finally ended.

But Netanyahu asked Gantz to postpone the swearing-in until Sunday so he could finalise cabinet assignments among his right-wing Likud party, said a statement from Likud and Gantz's Blue and White alliance.

"Gantz agreed to Netanyahu's request," the statement said.

Netanyahu and former military chief Gantz agreed to a three-year coalition government last month, with cabinet position split among their respective allies.

But in the three weeks since the deal was agreed, haggling over key posts has been fierce within Netanyahu's camp.

Netanyahu, in power since 2009, had informed President Reuven Rivlin on Wednesday that had his government had been finalised.

Thursday's statement did not spell out the unresolved issues.

Under the coalition deal, Netanyahu will serve as prime minister for the coming 18 months, a victory for a leader due to stand trial from May 24 on corruption charges, which he denies.

Gantz will be alternate prime minister -- a new position in Israeli governance -- for the first half of the deal, before he and Netanyahu swap roles.

Pro-Netanyahu paper Israel Hayom wrote Thursday that the premier had signed off on his own "expiration date" after the longest tenure as prime minister in Israeli history.

The 35th government since Israel's creation in 1948 includes representatives from across the political spectrum.

Cabinet posts have been assigned to the left-wing Labour party, Blue and White, Likud and leaders from conservative ultra-Orthodox Jewish parties.

Writing in the Yediot Aharonot newspaper, political columnist Ben-Dror Yemini said the coalition was "inflated" and "wasteful", pointing to the record 34 cabinet seats, a number that could grow to 36.

"It's unclear if (the government) has any ideology," he said. "It is all about seats."

Israeli Prime Minister Benjamin Netanyahu (L) and his former rival Benny Gantz agree on a new coalition government putting an end to Israel's longest political crisis
Israeli Prime Minister Benjamin Netanyahu (L) and his former rival Benny Gantz agree on a new coalition government putting an end to Israel's longest political crisis AFP / Emmanuel DUNAND

The large cabinet and additional funds for the new position of alternate prime minister, have prompted criticism as Israel seeks to rehabilitate an economy brutalised by the coronavirus pandemic.

Israel has recorded more than 16,500 COVID-19 cases, including more than 12,200 recoveries and more than 260 deaths.

While the country has lifted many lockdown restrictions as transmission rates have fallen in recent weeks, rampant unemployment caused by the pandemic remains an urgent concern.

Policy "guidelines" submitted by Netanyahu on Wednesday said the new government will build "a plan to exit the deep economic crisis".

The Netanyahu-Gantz deal says the government can from July 1 initiate moves to implement US President Donald Trump's controversial peace plan for the Israeli-Palestinian conflict.

The plan, rejected by the Palestinians, gives the green light from Washington for Israel to annex Jewish settlements and other territory in the occupied West Bank.

Such moves by Israel will likely cause international uproar and risk inflaming tensions in the restive West Bank, home to nearly three million Palestinians and some 400,000 Israelis living in settlements considered illegal under international law.

Renewed West Bank violence has left three people dead in as many days.

A Palestinian attacker who rammed his car into Israeli soldiers near Hebron was shot dead by troops on Thursday, a day after an Israeli killed a 15-year-old Palestinian, also near Hebron, as the army was suppressing riots.

A Palestinian stone-thrower killed an Israeli soldier on Tuesday during an arrest operation near Jenin, the army's first fatality of the year.

The government's guidelines make no mention of West Bank annexation plans.

Outgoing defence minister Naftali Bennett who heads the right-wing, nationalist Yemina party is expected to join the opposition.

A hardline promoter of annexation and the expansion of West Bank settlements, Bennett will be replaced by Gantz at the defence ministry.

Former US president Barack Obama's envoy to Israel, Daniel Shapiro, told AFP this week that Gantz was "lukewarm, at best", on West Bank annexations.

Jordan's Foreign Minister Ayman Safadi said Wednesday that "any Israeli decision to annex the settlements, the Jordan Valley and the north of the Dead Sea in occupied Palestine will be a disastrous step".