JERUSALEM: Israeli Foreign Minister Avigdor Lieberman on Monday vowed to stand down if indicted on graft charges, raising the spectre of disarray in the four-month-old rightwing coalition government.

But the English-language Jerusalem Post said an indictment would have little direct impact on Israel's foreign relations and Middle East peace efforts because of the limited diplomatic role it said Lieberman has played.

If Attorney General Menahem Mazuz "decides to indict me after hearing me out, I will step down (as foreign minister) and within the next four or five months I will quit as a member of parliament," the ultra-nationalist Lieberman told journalists.

But he added, "I am convinced that next year, and in two years too, I will still be foreign affairs minister."

Police on Sunday recommended indicting the controversial 51-year-old minister on charges of bribery, money laundering and obstruction of justice.

Lieberman, who leads Yisrael Beitenu, the second largest party in the ruling coalition, has denied any wrongdoing and claimed the police investigation is politically motivated.

In the coming days police will submit the recommendation to the attorney general, who will then decide whether to press charges.

Lieberman is suspected of receiving about 2.5 million dollars in illegal campaign donations through bank accounts opened by his daughter in Cyprus.

"The consequences, of course, could affect the stability of the government," the Maariv newspaper commented, adding however that it remained unclear whether Lieberman would pull his party out of the coalition if indicted.

With 15 seats in Israel's 120-member parliament, Yisrael Beitenu is the main coalition partner with Prime Minister Benjamin Netanyahu's rightwing Likud party.

The Jerusalem Post said the direct impact on foreign relations would be minimal if Lieberman is indicted.

"In other words, it is not as if the negotiations going on right now with the US will grind to a halt because of the police recommendation, because Lieberman was not actively involved in these talks," it said.

The administration of US President Barack Obama is on a diplomatic drive to relaunch the stalled Middle East peace process, but Netanyahu's refusal to heed demands for a freeze of settlement construction on occupied Palestinian land has raised tensions between the two close allies to levels not seen in years.

"The Egyptians won't deal with him, the Europeans give him a cold shoulder, he did not achieve as much as was expected during his visit to Russia, and the Americans are content dealing with Defence Minister Ehud Barak in his stead," the Post said of Lieberman.

A tough-talking immigrant from the former Soviet Union, Lieberman has sparked controversy in the past because of his hardline stance towards the Jewish state's Arab minority, which critics say smacks of racism.

Mazuz criticised the fact Lieberman was appointed in the first place.

"A properly-run country should not reach such a situation," the Haaretz newspaper quoted him as saying, adding that such appointments "constitute failures of the public system."

Lieberman has faced several investigations since 1996, which came to nothing.

A "serial suspect," he became "perhaps the most careful man in the history of Israeli politics" until he was tripped by "human error," Haaretz said.

"A group of documents that Lieberman forgot at a certain office reached the attorney general and eventually led to the unequivocal police recommendation," the newspaper said.