Prime Minister Menachem Begin of Israel announced tonight that he has formed a coalition government pledged to a dramatic shift away from secularism and to a hard-line policy on the occupied West Bank and Gaza.

After three weeks of intensive negotiations with religious parties, during which he made unprecedented concessions to demands for legislation affecting orthodox Jewish observance, Begin said he is assured of a minimum of 61 votes in the 120-member Knesset, just enough to form a government and win an initial vote of confidence when he presents it for formal approval Wednesday.

If endorsed, the Cabinet will contain many of the same political figures who have formed Israeli policy on the stalled Camp David autonomy talks with Egypt and the United States over the months: Begin, Interior Minister and chief autonomy negotiator Josef N Begin, Interior Minister and chief autonomy negotiator Josef Burg and Foreign Minister Yizhak Shamir. In addition, Agriculture Minister Ariel "Arik" Sharon, a controversial hardline general, becomes defense minister with responsibility over the West Bank and Gaza military authorities.

The alliance announced by Begin tonight was the result of cliff-hanging negotiations with his potential coalition partners. In theory it returns his rightist Likud government to power for another four years. But because of a razor-thin majority in the Knesset, or parliament, his government is certain to be challenged almost immediately with a series of no-confidence motions from the opposition Labor Party, which won 47 seats in the June 30 national election. The Likud won 48 seats in the balloting, the closest in Israel's 33-year history.

The installation vote Wednesday will come on the last day of the 21-day limit Begin had imposed on himself for forming a government. Although by law he could have had a three-week extension, Begin had vowed to call for a new election if he could not gain approval of a coalition by midnight Wednesday.

Begin's 11th-hour breakthrough was married by an announcement by Housing Minister David Levy, who was second on the Likud list to Begin, that he will not join the Likud Cabinet, even though he will vote for the coalition. Levy, one of the strongest figures in the Likud and widely regarded as a possible successor to the 69-year-old prime minister, said he would stay out of the government because the post of minister of immigrant absorption was split away from his housing ministry and given to one of the three religious party Knesset members who joined the coalition.

As in every government in Israel's history, the pivotal coalition partners in the Begin-led government will be the religious parties -- the National Regious Party and the ultraorthodox Augudat Yisrael Party -- which this time have been joined by the three-seat Tami Party, a National Religious Party splinter group formed by Sephjardic Israelis.

The religious parties, whose 13 seats in the Likud's 61-member coalition represent about 10 percent of the nearly 2 million votes cast in the election, extracted a heavy price from Begin in return for keeping the Likud in power.

They won five of the Cabinet's 16 portfolios, including the patronage-laden interior and religious affairs ministries, as well as the ministries of social welfare, absorption and education.

Moreover, the religious parties wrung from Begin far-reaching concessions that will impose strict orthodox observance on a wider scale than ever in Israel.

The major issues that dominated Begin's first four-year term -- the economy, national security and foreign affairs -- were almost eclipsed in the arduous coalition negotiations by the religious questions.

Among the key concessions was a promise by Begin to resolve the controversial "Who is a Jew?" issue in a "reasonable length of time," which although not specified was understood to be about two years.

Other concessions include cancellation of Saturday flights by El Al, the national airline; an end to Saturday work in Israeli ports and government-owned firms; prohibition on Israeli diplomats from attending Saturday functions; new wage scales for rabbis and increased funding for yeshivot, or religious schools; a ban on digging up skeletons at archeological sites without rabbinal approval, and increased military exemptions for certain religious Jews.

The chairman of the Labor Party's Knesset faction, Moshe Shahal, called it "the most shameful and abject surrender" to a religious minority and said he was "shocked" at many of the 81 separate clauses of the religious parties' demands.

Beyond the move away from secularism in Israel, the "guidelines" adopted by the coalition say flatly that Israel will assert its sovereignty and annex the West Bank and Gaza after a five-year transition period envisioned in the proposed plan for Palestinian autonomy.

Despite the religious parties' doubling representation largely by obtaining double portfolios, the makeup of the Cabinet is similar to the previous government, with some reshuffling of jobs. The most important change is the appointment of Sharon, a much-debated figure in Israel's defense and political establishment for three decades, as defense minister. Begin has held that portfolio, along with the premiership, ever since Ezer Weizman quit the job last year in a policy dispute.

Former religious affairs minister Aharon Abuhatzeira, who was acquitted earlier this year on charge stemming from a kickback scandal in his ministry but who still is under indictment on unrelated bribery charges stemming from his term as mayor of the city of Ramle, will get the ministries of social welfare and absorption.

Angered because he was not promoted to a more responsible post, Energy Minister Yitzhak Modai said he will serve as a minister without portfolio. Of the remaining key ministries, Yoram Arridor retains his Finance Ministry portfolio and Simcha Ehrlich was reappointed as deputy prime minister, although he will also assume the Agriculture Ministry portfolio vacated by Sharon.