Israel's main union plans a strike that would shut airports, ports, banks and the stock market starting on Wednesday after talks with the government failed to produce an agreement on the status of workers employed through contractors.

The Histadrut labour federation, the umbrella organisation for hundreds of thousands of public sector workers, said the strike - estimated at causing economic damage of around USD$500 million a day - would begin at 0600 (0400 GMT) on Wednesday and would also include trains, the Bank of Israel and government offices.

Israel's Ben Gurion Airport near Tel Aviv will be shut only between 0600 and 1200 due to a court order, but the strike for all other services will be open-ended, the Histadrut said.

The airport will open two hours early at 0400 and flag carrier El Al said it pushed up take-offs of 15 flights to Europe to before 0600.

The local federation of chambers of commerce had sought an injunction against the strike but Israel's high court on Tuesday rejected the request.

"There is no reason to prevent the general strike on Wednesday," Justice Uzi Fogelman wrote in his decision.

Histadrut Chairman Ofer Eini and Finance Minister Yuval Steinitz met on Tuesday.

"The only weapon workers have is the weapon of a strike," Eini said.

Histadrut wants the government to hire some 250,000 contract workers, such as cleaners and security guards, who have inferior working conditions than workers directly on government payrolls.

The Finance Ministry said it cannot take on so many new workers but has offered to improve their conditions by raising salaries by at least 20 percent while giving more holiday time.

"The strike is unnecessary and would have enormous consequences on the economy," a ministry spokeswoman said.

Last November, Histadrut held a strike for the same reason but Israel's labour court limited the action to just four hours and ordered the two sides to work out a deal.

Negotiations failed to produce an agreement and the court, until now, had rejected a number of strike requests.

Both sides must reappear in court at 1200 GMT on Wednesday to report on the status of negotiations.