The appointment of a hardline right-winger as Israel's defence minister represents a "real threat" to regional stability, a senior Palestinian official said on Wednesday.

"The existence of this government brings a real threat of instability and extremism in the region," Palestinian chief negotiator Saeb Erekat said, adding that the appointment would "result in apartheid, racism and religious and political extremism."

Israeli Prime Minister Benjamin Netanyahu confirmed on Wednesday that Jewish settler Avigdor Lieberman would take over as defence minister.