The newly formed unity government was created to advance the main issues facing Israel today, including a "responsible peace process," Prime Minister Benjamin Netanyahu said in a joint press conference with Kadima head Shaul Mofaz on Tuesday, while the leader of Israel's Labor Party Shelly Yacimovich - thought likely to be become leader of the opposition - slammed the pair's pronouncements in her own press conference later on Tuesday.

Earlier on Tuesday, Netanyahu and Mofaz reached a surprise agreement to form a national unity government, a decision which came as the Knesset was preparing to disperse for early elections, which were expected to be scheduled for September 4.

Netanyahu told reporters on Tuesday that the new unity government will bring stability to Israel.

"The State of Israel needs stability," he said. "From the very beginning I wanted to continue to [the original date of the] elections, and when I saw that that stability was being undone I went for [early] elections," Netanyahu said, adding he "jumped at the opportunity" to create the "widest government in Israel's history."

Netanyahu also spoke of those criticizing the deal, saying that "up until a few days ago, I was told that I wanted elections in order to escape the budget, the Tal Law, and the toughest questions facing Israel."

"And here were are together, Shaul and I and the rest of the coalition, saying we're pulling together for four main issues: to pass a fair and equal replacement of the Tal Law; to pass a responsible budget; to change the system of governance; and, lastly, to try and promote a responsible peace process."

Also speaking at the conference, Mofaz said that there were "times in the life of a nation in which it is required to take significant decisions. There are moments in a leader's life in which he has to take decisions that have a personal significance."

"The time has come to change the agenda. This is a move of unity which is important to Israel's future. A coalition of 94 MKs could better deal with the challenges Israel's future holds," Mofaz added, saying: "We're here to join hands, and face the challenges, and they are not easy."

The Kadima chief said that Israel had to choose its path, adding that the foremost issues the country faced have "a solid majority in this Knesset. There's a clear majority in Israel for creating an equation of [military or civil] service for all."

"We will bring a new system of government from the 19th Knesset onwards, and that achievement itself is enough. The change could affect the entire Israeli way of life," he added.

Under the agreement reached earlier on Tuesday, Kadima will join Netanyahu's government and commit to supporting its policies through the end of its term in late 2013. Mofaz is expected to be appointed deputy prime minister, as well as minister without portfolio.

At the press conference, Netanyahu told reporters that the decision to form a unity government was made after early elections were announced.

Leader of the Israel Labor Party Shelly Yacimovich responded to Netanyahu and Mofaz's statements in a press conference later on Tuesday, asking, "Does anyone believe a word that came of Mofaz's mouth at the press conference?," and saying that the tone in which they addressed reporters was "masculine and sure of itself."

She called the formation of the unity government "the most ridiculous zizag in the history of Israeli politics," abd criticized Kadima as leader of the opposition. "Kadima has been a farcical opposition during this entire administration," she said.

Addressing earlier promises Mofaz had made to lead social protests in Israel, she said, "Where would he lead it from? Netanyahu's office? There is no limit to the dissonance between what he said and reality."

Tuesday's surprising move shocked Israeli politics, unleashing harsh criticism from opposition members, and praise from members of the Likud-led governing coalition.

President Shimon Peres praised the move and said that "a national unity government is good for the people in Israel." A unity government will help Israel deal with the challenges it faces, he added.

Former leader of the opposition Tzipi Livni came out in criticism of the move on her Facebook page. "This morning I want say one sentence to each and every one of you. I know exactly what you feel right now after what happened last night – but remember that there is also another kind of politics, and it will win," she wrote.

Israel Labor Party leader Shelly Yacimovich slammed the maneuver as "an alliance of cowards," and the most ridiculous zig-zag in Israel's political history, which no one will ever forget.

She also said that the move represented the end of Kadima, and, as such, a unique opportunity for the Israeli Labor Party to lead the opposition.