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JERUSALEM - Israeli Prime Minister-designate Tzipi Livni suffered a blow to her efforts to build a new government Friday when the ultra-Orthodox Shas party announced it would not join her coalition. The move could push Israel closer to new national elections.

Livni has until Nov. 3 to assemble a proposed government, which then must be approved by a majority of the 120-member Knesset, Israel's parliament.

But Livni, the current foreign minister who narrowly won leadership of the centrist Kadima Party last month, has indicated she won't take negotiations down to the wire. On Thursday, she gave potential partners a Sunday deadline to join a coalition.

If Livni does abandon her efforts, President Shimon Peres would decide whether to call for new elections or chose another Knesset member to try to build a viable coalition.

Although the declaration by Shas, which holds 12 Knesset seats, simply might be an exercise in brinkmanship, party Chairman Eli Yishai insisted Friday that the decision by Shas' Council of Torah Sages was final.

"Shas cannot be bought. We will stick to our goals and principles," Yishai said.

Weeks of talks between the two sides have centered on two main Shas demands: millions of dollars in welfare payments that favor ultra-Orthodox families and a pledge by Livni not to discuss dividing Jerusalem in her peace talks with the Palestinians. It's unclear which of Shas' demands her negotiators failed to satisfy.

Livni still could cobble together a coalition without Shas.

She has formed an alliance with the Labor Party, led by Defense Minister Ehud Barak, and together they control 48 Knesset seats. She could draw in several smaller parties such as United Torah Judaism, the leftist Meretz Party and the Pensioners Party to gain the support of the 61 lawmakers or more she would need to win approval for her government.