JERUSALEM (AP) _ Israel's rival religious and secular parties vied today for a place in the government of Prime Minister-elect Ehud Barak, who reached out to world leaders to assure them the Arab-Israeli peace process would move forward.

Palestinians, though, signaled that any honeymoon with Barak be might be brief, renewing pressure for speedy statehood.

``God willing, we will have our state with Jerusalem as its capital by the end of this year,'' Tayyeb Abdel Rahim, secretary-general of the Palestinian Authority, said at the opening of a religious school in the Gaza Strip today.

The Palestinians are already urging Barak to halt Jewish settlement construction in Jerusalem, whose status is one of the thorniest issues dividing Israel and the Palestinians. Bulldozers were at work again today in the contested Jerusalem neighborhoods of Ras al-Amud and Har Homa.

Barak's camp said it was too early for him to tackle the question of Jewish construction in east Jerusalem because he won't take office for several weeks.

Barak has consistently said he would keep Jerusalem united under Israeli control _ a position he repeated in his victory speech early Tuesday after his landslide win over Prime Minister Benjamin Netanyahu.

``It was a negative message and a bad start,'' Nabil Amr, the Palestinian minister of parliamentary affairs, declared today. Palestinians want Jerusalem's traditionally Arab eastern sector to be the capital of their future state.

While sidestepping the immediate question of new settlement-building, Barak's party said his government intends to implement the U.S.-brokered Wye River accord by year's end.

Barak talked Tuesday with President Clinton, who also held what the Palestinians described as an ``important'' discussion with Palestinian leader Yasser Arafat, promising to try to get peace efforts back on track.

Labor party official Avraham Burg said Barak wants an early meeting with Clinton, followed by a peace conference with Arafat, Egyptian President Hosni Mubarak and King Abdullah of Jordan.

Barak has spoken to Arafat, Mubarak and Abdullah, as well as with French President Jacques Chirac, Britain's Tony Blair, Vice President Al Gore and Secretary of State Madeleine Albright, said Alon Pinkas, Barak's foreign policy spokesman. He said all discussions have been general in nature.

``We will re-launch the peace process as soon as we possibly can with only one thing in mind: Israel's security interests. But everything will have to wait until after we form a government,'' he said.

Netanyahu signed the Wye River accord in October and carried out the first of three transfers of West Bank territory to the Palestinians, but stopped the process, charging that the Palestinians were not carrying out their part of the deal.

The shape of Barak's new government will affect the speed with which he is able to act on peace matters. A narrow coalition could move faster on individual issues, but a broad-based one would be more likely to achieve lasting consensus on the overall shape of the peace settlement.

Formal talks on forming the government will not begin until the weekend, but already there was a scramble for spots in Barak's Cabinet and coalition.

Barak, whose Labor party won 27 seats in the 120-seat Knesset, has 45 days to form a new government, with Netanyahu remaining as a caretaker until then. Barak must form a majority coalition among the 15 parties represented in parliament.

Perhaps the biggest dilemma for Barak is whether to align himself with the much-weakened Likud party or seek an alliance with the newly powerful ultra-religious party Shas.

Shas vaulted to the third-largest party in Monday's elections, winning 17 seats as opposed to its previous 10. The party mainly represents religious Jews of Sephardic, or Middle Eastern, origin.

In an interview published today, Barak ruled out coalition negotiations with Shas unless its leader, convicted of bribery, formally removes himself from any talks.

Barak told the Maariv daily he would not accept a ``fictitious'' situation in which Shas strongman Arieh Deri, who is appealing his conviction, would handle negotiations ``by remote control, through proxies.'' Deri has resigned his parlimentary seat, but still might retain a behind-the-scenes role in the Shas movement.

Barak aides say he prefers to bring Likud, which slipped to 19 seats in the new parliament, into the government rather than Shas.

In recent years, secular Jews' resentment of the ultra-religious establishment has grown. Ultra-Orthodox Jews are exempt from the military draft and Orthodox welfare projects received huge government funding. Many secular Jews are also angry over religious restrictions such as pressure to keep all business establishments closed on the Jewish Sabbath.

``With the Likud we have an understanding on what the state of Israel is and how it looks. With Shas, we do not have an understanding like that,'' Burg said.

Speculation mounted, meanwhile, about the potential role of Ariel Sharon, Netanyahu's hard-line foreign minister, who was chosen as the temporary leader of Likud after Netanyahu stepped down Monday.

Other politicians being mentioned for Cabinet seats were former Prime Minister Shimon Peres, who is seeking a senior position dealing with peace issues, and former Soviet dissident Natan Sharansky, who wants to run the Interior Ministry, the powerful gatekeeper of immigration to Israel.

Election fallout continued to claim casualties. Benny Begin, leader of a right-wing party and the son of late Prime Minister Menachem Begin, said today he will quit parliament and retire from politics.

Begin dropped out of the race for prime minister on election eve with polls showing he would only get about 2 percent of the vote.