JERUSALEM, Aug 22: Israeli Prime Minister Ehud Olmert’s coalition government was jolted on Tuesday by a row over financing the war in Lebanon, a week after a shaky ceasefire with Hezbollah guerrillas took effect.

Tensions flared after members of Mr Olmert’s top coalition partner, the left-leaning Labour party, balked at supporting a two billion shekel ($459 million) budget cut to cover military expenses and help northern Israel recover from the war.

Officials said that without the funds, Israeli reservists, many of whom are already seething over the army’s failure to crush Hezbollah, cannot be paid.

Parliament’s finance committee postponed a vote on the across-the-board spending cut that had been approved by the cabinet after two Labour members refused to support it.

“The meaning of this is that Israel has no coalition today. The Labour party isn’t a coalition partner you can rely on,” Avigdor Yitzhaki, the coalition whip in Olmert’s centrist Kadima party, told Israel Radio after the stormy debate.

“Therefore I will propose to the prime minister that he do an immediate reshuffle to restart the coalition process.”

Mr Olmert has been weakened politically by criticism of his handling of the month-long war, sparked when Hezbollah seized two soldiers in a July 12 cross-border raid.

Hundreds of reservists back from fighting have launched protests and called for a broad investigation. Some have demanded the resignations of both Olmert and Defence Minister Amir Peretz, who heads the Labour party.

BUDGET HURTS THE WEAK: Labour lawmaker Avishai Braverman said he objected to cuts in welfare spending. “My conscience won’t let me raise my hand in favour of a budget that hurts the weak,” he said.