Israel's ultra-Orthodox Shas party has agreed to conditions that will pave the way for its return to the government and end a coalition crisis, party officials said.

Israeli Prime Minister Ariel Sharon sacked four ministers from Shas, which holds 17 parliamentary seats, last week when the party failed to vote in support of an emergency budget cut plan.

Israel has spent massively on its military budget

The decision left Mr Sharon with just 60 seats in the 120 member Knesset.

Shas, which sees itself as the defender of Israel's poor, had refused to support massive cuts in Israel's budget, which is feeling the pinch from its huge defence spending and the effects of recession.

The head of the Shas party, Eli Yishai, signed a letter outlining Mr Sharon's conditions for the return of the party, said Nissim Dahan, one of the ministers who was dismissed.

Chance to speak out

Under the agreement, although Shas will have to support the budget plan when it is next voted on, it will be able to raise objections to the proposed cuts in a parliamentary committee beforehand.

"We are not naive. We know that if we signed what we signed (the deal to return to government), then of course we have certain understandings regarding the poorer sectors so we can really change substantial things in the economic plan," Shas member of parliament Yair Peretz said.

After Shas helped to defeat the plan when it was proposed the first time Mr Sharon resubmitted the budget and it will be voted on again.

For Mr Sharon's Likud party the return of its coalition partner will be a relief.

"I wasn't happy about this crisis and so I think it's right to bring Shas back to the government, especially after they accepted the condition to support the government's economic plan and support the government in its laws," Likud's Justice Minister Meir Sheetrit said.

As the deal was hammered out Likud were also trying to secure an agreement with its reluctant coalition partner Labor, to ensure that their alliance remains intact for at least another year, Israeli media reported.