By Dan Williams

JERUSALEM (Reuters) - An ultra-Orthodox Jewish party in Israel's coalition government is wary of plans for possible military strikes on Iran, political sources said on Thursday.

Reservations by Rabbi Ovadia Yosef, the top spiritual authority for the Shas party, could be an obstacle to any attempt by Prime Minister Benjamin Netanyahu to get security cabinet approval for hitting Iran's nuclear sites.

"He believes the price would be too high, and for an action that may not achieve its goal," said a person briefed on discussions inside the Shas party, speaking on condition of anonymity.

Israeli leaders have long weighed the possible benefits of striking Iran with the operational and diplomatic risks, and officials say Netanyahu's inner council of nine senior ministers is split - a harbinger of deadlock should he seek a vote.

While most ministers might individually be persuaded to reconsider, those from Shas, the third-biggest coalition partner, are subject to Yosef's instructions.

Asked about the rabbi's opposition, which was reported by Israel's Channel 10 television and corroborated to Reuters by two political sources, Shas party leader and deputy prime minister Eli Yishai was reticent.

"I cannot confirm or not confirm any report about Iran. I think that this chatter is doing us great damage," Yishai told Israel's Army Radio in an interview.

But he indicated that Shas - and the Netanyahu government as a whole - had yet to decide on whether to strike the Islamic republic which it believes is developing nuclear weapons technology that could be a threat to Israel's existence.

Netanyahu's office declined comment.

DECISION PENDING

Yosef, a 91-year-old former Israeli chief rabbi, gave a sermon on Saturday calling for next month's Jewish holidays to include prayers for the destruction of Iran, "those evil ones who threaten Israel".

Though often hawkish in tone, Yosef has in the past broken with Israeli ultra-nationalists by calling on Israel to cede occupied land for peace with the Palestinians and spare lives.

Yishai, a member of Netanyahu's inner council and the 14-member security cabinet that would vote on striking Iran, was last year videotaped telling Shas supporters that his worries about a flare-up with Iran and its allies in Lebanon, Gaza and Syria were making it "difficult to sleep".

Despite having an advanced military which is widely reputed to include the region's sole atomic arsenal, Israel would be hard put to fend off a multi-front missile war sparked by an attack on Iran.

Washington, which is pressing the diplomatic rather than military option, has waned Israel against acting unilaterally.

Moshe Yaalon, another deputy Israeli prime minister, said on Wednesday the debate about whether and how to tackle Iran was ongoing.

"The situation today is not the same as a year ago and is not the same as it will be in a month or two months' time," Yaalon told Army Radio.

"So when we will have to discuss the matter - and I hope we will not be forced to take a decision of this type - we will know if we have a majority or we don't have a majority and we will know what we are deciding."

(Writing by Dan Williams; Editing by Robin Pomeroy)