Israeli Prime Minister Ariel Sharon has reached an agreement to bring the right-wing National Religious Party into his government. The accord has increased Mr. Sharon's chances of building a majority coalition, but appears to have ended any possibility of an alliance with the moderate Labor Party.

Mr. Sharon's ruling Likud Party signed a draft agreement to include the National Religious Party, the NRP, in a new cabinet.

The NRP supports the expansion of Jewish settlements in the West Bank and Gaza Strip, and opposes the notion of giving up any of these territories for the formation of an independent Palestinian State.

Under the agreement, the NRP will get two Cabinet posts.

The move appears to have dashed any further hopes that the Labor Party might join a new national unity government, following Mr. Sharon's victory in last month's elections.

Labor favors an immediate resumption of negotiations with the Palestinians and the dismantling of some Jewish settlements. The Labor faction rejects the policies of the NRP, which it regards as the voice of the Jewish settlers.

In the wake of the accord, Labor Party chairman Amram Mitzna called off any further discussions with Mr. Sharon on joining a new government.

The Labor leader accused Mr. Sharon of working behind his back to reach an agreement with the NRP.

With Labor now refusing to join a new government, Mr. Sharon is expected to concentrate his efforts on wooing the centrist and secular Shinui party into a coalition.

Shinui, the third largest party in the Knesset, the Israeli parliament, wants to see a marked reduction in the power of Israel's religious establishment to control the lives of the nation's citizens.

At the same time, Shinui, unlike Labor, says it is possible to form a working relationship with the NRP.

Mr. Sharon, with the 40 seats of his Likud faction, combined with 15 from Shinui and six from the NRP, would then gain a single-vote majority in the 120-seat parliament.