Prime Minister-elect Ehud Barak, scrambling to assemble a government by next week's deadline, moved today toward a coalition that would be broadly receptive to reviving stalled peace talks with Israel's Arab neighbors.

After weeks of considering two basic options for his government -- one including the hawkish Likud party, the other, the comparatively dovish Shas party -- Barak appeared to opt for the doves. The hard-line Likud leader, Ariel Sharon, today walked out of talks with Barak and declared them as good as dead after Barak apparently refused to compromise on several key issues at the heart of peacemaking with the Arabs.

Sharon, foreign minister in the outgoing Likud government, said Barak would not commit himself to pressing forward aggressively with Jewish settlements in disputed parts of Jerusalem and declined to rule out a broad withdrawal from the Israeli-occupied Golan Heights.

Those are among the clearest signals yet that Barak intends a real break from the policies of Likud, which have led to stagnation in peacemaking since the Likud prime minister, Binyamin Netanyahu, took office in 1996.

"I do not see a way for Likud to join a government. It is heading into the opposition," Sharon told journalists after his latest meeting with Barak. "A full partnership was necessary [but] this kind of partnership was not proposed to us."

Barak, who trounced Netanyahu in national elections May 17, has not yet taken office. He has until July 9 to put together a new government and present it to the Knesset, Israel's parliament. He needs the support of at least 61 members of the 120-seat Knesset, but he has said he wants to form the broadest possible coalition.

Fifteen parties are represented in the incoming Knesset, and Barak has already made deals to include a handful of the smaller and mid-size ones in his government. But he is eager to broaden his Labor-led coalition by including either Likud, the second largest bloc with 19 seats, or Shas, an ultra-religious party backed by Jews of North African descent, which controls 17 seats.

Pared down to the essentials, Barak's choice is between pursuing peace at home or peace abroad. With Likud in his government, Barak might have forged a broad secular coalition and achieved a measure of domestic tranquillity, but he may also have been blocked from making swift progress toward peace. With Shas in his government, he may be able to move aggressively on peace, but perhaps at the price of exacerbating the already bitter divisions between ultra-religious and resolutely secular Israelis.

If he can make a deal with Shas in the coming days, Barak may be able to present a government backed by 77 members of the Knesset, including parties representing Russian immigrants; liberal secularists; centrists; religious Zionists and the ultra-Orthodox of Shas and one smaller party.

Today's developments were the latest chapter in a 40-day political drama that has bored some Israelis, transfixed others and prompted critics to attack Barak for squandering his landslide electoral victory.

"The momentum, the urge for change, the determination -- all of it has dissipated," columnist Nahum Barnea wrote in Yedioth Aharonoth.