The main opposition to the unity government is coming from Labor Party activists, who are against joining up with far-right parties.
"Those who go with this sort of government, even if it be most of the party's central committee, must know the party is heading for a crash," said Labor leader Yossi Beilin, who is justice minister in Ehud Barak's government. He warned that if Labor voted to join Likud, it would lead to the party's collapse.
The rightist Likud Party leader, who defeated Labor Prime Minister Ehud Barak in a Feb. 6 election, hoped to have a government in place for the visit this weekend by Secretary of State Colin Powell.
The center-left Labor Party, Israel's largest political bloc, was thrown into turmoil by Barak's decision Tuesday to step down from the party leadership and retire from politics.
A power-sharing deal with Labor is perhaps Sharon's only hope of forming a stable coalition that will enable him to deliver on an election promise to push peacemaking forward with the Palestinians in the face of violence.
The Labor Party is deeply divided over whether it should join a government that includes the ultra-right-wing National Union and Yisrael Beitenu parties.
Amid all the political wrangling, Sharon met a team of advisers Wednesday to prepare for talks with Powell, who took office a month ago with President Bush and embarks on a four-day Middle East tour Friday. Sharon is due to meet Powell Sunday.
New violence in which an Israeli motorist was wounded by Palestinian gunmen at a Jerusalem intersection early Thursday underscored the difficult task ahead for th Bush administration's first dip into troubled Middle East waters.
The motorist, from the Maale Adumim Jewish settlement, was wounded in the shoulder by four Palestinians who stopped his car to ask for directions at a set of traffic lights and then opened fire with a Kalashnikov rifle.
A Palestinian husband and wife were shot and wounded after Palestinian gunmen opened fire at an Israeli bus driving near their house in the West Bank. Palestinian hospital officials said the couple was hit when Israeli soldiers returned fire.
More than 400 people, 330 of them Palestinians, have been killed in the intifada that erupted after Sharon visited a volatile holy site in Jerusalem in late September. Sixty-one Israelis and 13 Israeli Arabs have also died.
Palestinian police detained two Palestinians they believe were behind a bomb explosion that Israeli security forces called a "work accident" in Hebron on Thursday.
Police said they were investigating the blast in a Palestinian-controlled part of the divided West Bank city. No one was hurt in the explosion. Israeli security forces said the bomb blew up prematurely and was intended to be used in an attack against Israelis.
In Jerusalem, Foreign Minister Shlomo Ben-Ami and Beilin met other Laborites opposed to an alliance with Likud, underscoring the deepening split over whether to join forces.
The Labor whip, Ofir Pines-Paz, accused Sharon of playing a double game by courting both Labor and far-right parties that oppose peacemaking with the Palestinians. Pines-Paz said at least half of Labor opposed an alliance with the two parties.
Despite an end of March deadline to form a government or face elections, Sharon said in a speech Wednesday he was determined to form a coalition with Labor.
"This thing will happen it is simply something that will come about. I will not give up on it," he said.
Labor Secretary-General Raanan Cohen said the party was nearing a decision on whether to join the coalition and would meet a Monday deadline set by Likud.
Ben-Ami said that by choosing to join a unity government, Labor would be sacrificing the chance to rehabilitate itself after Sharon's unprecedented landslide victory over Barak.
"We must see this struggle as a basis for renewal and rebuilding. This is a crucial question for the party and also the country. We must be capable of presenting an alternative," Ben-Ami told Army Radio.
©MMI Viacom Internet Services Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Reuters Limited contributed to this report