Israel's Kahlon finance minister with his hands tied

Israel's Finance Minister Moshe Kahlon, who has vowed to axe housing prices and take on the banks, faces an uphill battle to implement reform in a government with a razor-thin majority.

Considered one of the winners of snap elections in March, the 54-year-old's centre-right Kulanu party won 10 of the parliament's 120 seats after campaigning on a ticket of social and economic reform.

After weeks of tense haggling, Kahlon was the first to sign up to the emerging rightwing religious coalition led by Prime Minister Benjamin Netanyahu's rightwing Likud which was expected to command a 67-seat majority.

But, everything changed when Foreign Minister Avigdor Lieberman said he would not take his hardline Yisrael Beitenu party into government.

It left Netanyahu with 61 seats and Kahlon with a headache.

He had previously said he would not to join a government with such a knife-edge majority.

"Kahlon agonised," wrote Ben Caspit in the Maariv daily.

"Quite a number of people in his circle believe that the emerging government will be a death trap for Moshe Kahlon."

But it was too late for him to go back on his agreement with Netanyahu.

According to the coalition agreement with Kulanu, the party's 10 MPs are free to vote against legislation seeking to curb the powers of the Supreme Court.

This effective veto power is likely to put Kulanu on a collision course with Jewish Home which has secured the role of justice minister for Ayelet Shaked, a firebrand MP that has spearheaded efforts to clip the court's wings.

A former Likud minister who won huge support for breaking up a years-long monopoly within Israel's mobile phone industry, Kahlon left the rightwing party two years ago.

He returned to the political stage late last year at the head of a new party called Kulanu, that won 10 seats in the election following a campaign focused on the chronic shortage of affordable housing and a pledge to reform the banks.

Those goals were never going to be easily won, but with only three Kulanu ministers in a cabinet Netanyahu said would contain 22 ministers, Kahlon's ability to fulfil his pledges is doubtful.

Not only will he have to take on vested business interests but also coalition partners who will seek to block his path, said Yediot Aharonot's Eitan Haber.

"In politics today, unfortunately, there is almost only one formula for success: The failure of the rival," he wrote.

"Many high-placed people are lying in wait for him, watching his every move.  They will find all manner of excuses to block every move he makes."

While in Likud, he cut a hawkish figure on foreign policy, but Kahlon has since made an apparent U-turn, saying he would be prepared to make concessions for peace with the Palestinians.