* Netanyahu invites Labour to join coalition

* Labour seen rejecting offer due to far-right

* Offer could be aimed at luring Kadima

(Updates with Barak statement)

JERUSALEM, March 18 (Reuters) - Israeli Prime Minister-designate Benjamin Netanyahu invited the centre-left Labour party to join his coalition on Wednesday in an apparent bid to soften an emerging hardline cabinet.

Labour Party chairman Ehud Barak said in a statement that the party should "seriously consider" the offer.

But Labour's secretary-general, Eitan Cabel, said most members would likely oppose joining a coalition including far-right parties Netanyahu has teamed up with, who have opposed U.S.-sponsored talks with Palestinians for a two-state solution.

"The diplomatic, security, economic and social challenges facing Israel make it imperative the Labour party's hierarchy seriously consider (Netanyahu's invitation)," Barak's statement read.

The move by Netanyahu, who faces an April 3 deadline to form a new government, also seemed a last-ditch bid to persuade outgoing Foreign Minister Tzipi Livni, head of centrist Kadima and a Barak rival, to join his cabinet.

Livni's Kadima party called off talks on a possible coalition with Netanyahu earlier this month after Livni accused him of not being committed to pursuing the U.S.-sponsored vision of a Palestinian state alongside Israel.

A statement issued by Likud said "Netanyahu calls on the Labour party to join a national unity government," adding that its expertise in defence and diplomacy "could very much strengthen the nation's leadership."

Israel Radio said Netanyahu had offered to keep Barak, a former prime minister, in his current post of defence minister and give Labour another four cabinet seats.

After decades of dominating Israeli politics, Labour has shrunk to 12 seats in the 120-seat parliament following last month's general election. That makes it the fourth-largest party in the Knesset.

But Shalom Simchon, a Barak party ally said Labour faced a dilemma working alongside ultra-nationalist parties teaming up with Netanyahu, such as Avigdor Lieberman, whose party sealed a deal this week with Likud to name him foreign minister.

Lieberman advocates that under any peace deal with Palestinians, to trade land where Israeli Arab citizens live for Jewish settlements in the occupied West Bank and limiting rights of those involved in what Israel sees as terrorism or espionage.

Though criticised abroad, the Russian-speaking Lieberman has soared to control of 15 seats in Israel's parliament, making his party Israel's third largest, behind Netanyahu's Likud with 27 and Livni's Kadima with 28 seats.

Cabel, Labour's secretary-general, predicted "the vast majority will vote no with a capital N," to joining any coalition alongside Lieberman, which he thought could undermine the party's credibility and bring about its demise.

Barak's statement said that in the event that the party's basic demands are met, he would propose joining the coalition. Reports said this could happen early next week. (Writing by Allyn Fisher-Ilan; editing by Philippa Fletcher)

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