Leaders of Israel's two main political blocs agreed to maintain their longstanding refusal to talk to the PLO in their new coalition government, Foreign Minister Shimon Peres said Tuesday.

The right-wing Likud bloc and the center-left Labor Party were expected to initial their coalition pact Tuesday after negotiators agree on final details of foreign and economic policy. The formal signing is expected in a day or two.The agreement Monday to form another coalition resolved a seven-week stalemate after national elections Nov. 1, in which neither party received a clear mandate. Likud won 40 seats in the 120-seat Parliament and Labor won 39.

Peres, who spoke to reporters after Labor ministers ratified the agreement, said the pact reiterates the guidelines of Israel's outgoing government "that there will be no negotiations with the PLO."

The ban was maintained despite a U.S. decision last week to open a "substantive dialogue" with the Palestine Liberation Organization. The decision stunned Israel.

The agreement also does not require the government to fulfill a demand by religious parties to pass a law that would narrow the definition of a Jew to exclude those converted by non-Orthodox rabbis.

The ammendment to the so-called Law of Return, which fixes eligibility for Israeli citizenship, deeply angered U.S. Jews, most of whom are non-Orthodox.

"The government will work to keep the Jewish people united. This brings an end to a change in the Law of Return," Peres said.

The new Cabinet, to be headed by Prime Minister Yitzhak Shamir of Likud, is expected to command a majority of up to 97 seats in Parliament, or the Knesset, including several smaller religious parties expected to join.

It will contain 24 or 25 ministers, 10 each for Likud and Labor with the remainder going to the smaller parties. Most key posts will be held by the same officials as in the last government, with Yitzhak Rabin of Labor remaining defense minister and Ariel Sharon of Likud industry minister.

Peres, leader of the Labor Party, will become finance minister. The party chose the post for Peres so they would have a springboard for funneling money to the nation's ailing collective farms, or kibbutzim, many of which are aligned with Labor, and a string of industries owned by the Histadrut Labor Federation.

The Hadashot newspaper said the government's new program calls for a peace initiative "aspiring for direct negotiations with Arab states and a delegation of Palestinians made up of leaders from the (occupied) territories."

The program vows to "act aggressively to restore security in the territories," and says all political peace initiatives would have to be approved in advance by the Cabinet, the newspaper said.