Protecting settlements has pushed up defence costs

The action looks likely to close the country's ports and airports and cripple public services, as well as shutting down key private sector groups such as the Tel Aviv Stock Exchange, observers said.

A general strike was first mooted by the Histadrut, the country's main labour federation, last month after Finance Minister Binyamin Netanyahu unveiled 10% cuts across the board for ministry budgets, as well as sackings of up to one in 10 public sector workers.

Mr Netanyahu says the austerity measures are needed to reduce a 16bn shekel (�2.2bn; $3.5bn) hole in the country's finances.

As of Wednesday we will launch the largest strike in the history of Israel Amir Peretz, labour group leader

And he is scheduled to take the plan to the Knesset (parliament) for voting on Wednesday, following the breakdown in talks with the unions.

Only the direct intervention of Prime Minister Ariel Sharon could stop the strike now, observers said.

"As of Wednesday we will launch the largest strike in the history of Israel," said Histadrut chairman and Knesset member Amir Peretz.

"On Wednesday morning at 6am (0300 GMT), we are beginning our battle," he told Israel Radio.

"We have no intention of stuttering or giving in. We intend to take important social-economic action to save democracy."

Recession

For the Histadrut, the 11bn shekel cuts are a step too far, not least because they were imposed in violation of collective bargaining agreements.

The organisation acknowledges that Israel's economy is in tatters after two years of a renewed Palestinian uprising, which has hit key sectors including tourism and construction and slashed tax receipts.

Security spending has ballooned too, just as the global downturn hit the burgeoning hi-tech industries which Israel had spun off from its military research programmes.

While wealthy Israelis remain relatively comfortable, more than one Israeli worker in 10 is now out of work.

Betrayal

But union activists say they are being asked to take too much pain without any say in the matter, at the same time as Mr Netanyahu is planning tax cuts.

Calling the Knesset vote amounted to betrayal, they say, because it implies the government has ditched the negotiations.

Business leaders, meanwhile, warn that the economic impact of the strike will be immense.

The first two days of the strike will cost 800m shekels, with every day thereafter carrying a price tag of 250m shekels, they say.