Former Israeli foreign minister Avigdor Lieberman walked free from court after being cleared on corruption charges.

The case had threatened to derail his political career and reshape the make-up of Binyamin Netanahu's coalition government, but he could now return to the political arena stronger than ever.

"This chapter is behind me. I am focusing on the challenges ahead and there are plenty of challenges," he said after the verdict.

Mr Lieberman was forced to step down as foreign minister early this year to face the charges but was allowed to keep his seat in parliament.

Following the decision, Mr Netanyahu rang Mr Lieberman to congratulate him and said he was looking forward to his "return to the government."

Mr Lieberman, an immigrant from the former Soviet republic of Moldova, has long been dogged by allegations of corruption.

But this case was the first time he had been accused of criminal behaviour.

He was charged with fraud and breach of trust for allegedly trying to advance the career of a former diplomat who passed on information about a separate criminal probe into Mr Lieberman's business dealings.

The court found than Mr Lieberman "acted improperly" but not criminally.

Prosecutor Michal Sibel-Darel said her team would study the decision before deciding whether to appeal.

Labour opposition leader Shelly Yachimovich said the Israeli public "is left with a corrupt man in a key senior position."

She urged the attorney general to appeal and begged Mr Netanyahu not to reappoint Mr Lieberman.

"It is impossible to shake the feeling that Lieberman succeeded in fooling the justice system in Israel and manipulating it," she said.