After Avigdor Lieberman announced his resignation on Wednesday, Netanyahu was clinging to a one-seat majority in parliament and one of his main right-wing rivals was also threatening to pull out of the coalition.
Education Minister Naftali Bennett of the far-right Jewish Home party was demanding to be given the defence portfolio or he would withdraw his eight seats from Netanyahu’s governing coalition.
Another key coalition partner, Finance Minister Moshe Kahlon of centre-right Kulanu, reportedly told Netanyahu elections should be called as soon as possible because a stable government was needed to keep the economy on track.
Netanyahu was meanwhile seeking to contain the political fallout of his decision to accept a ceasefire deal on Tuesday that ended the worst escalation between Israel and Palestinian militants in Gazasince a 2014 war.
Lieberman said it was “capitulating to terror” when announcing his resignation and also criticised Netanyahu’s recent decision to allow Qatar to send millions of dollars in aid to the blockaded Palestinian enclave.
He formally submitted his resignation on Thursday.
Beyond that, there have been protests calling for tough action against Hamas by Israelis living near the Gaza border whose communities were targeted by barrages of rockets from Gaza this week.
A poll published on Thursday found some 74 percent of respondents were unhappy with Netanyahu’s handling of the escalation with Gaza and its Islamist rulers Hamas.
Giving further ammunition to Netanyahu’s political critics, Hamas has portrayed the ceasefire and Lieberman’s resignation as a victory.
“This government has failed to establish deterrence,” Justice Minister Ayelet Shaked, from Bennett’s Jewish Home, told army radio on Thursday.
Netanyahu’s political popularity is in large part due to his reputation as Israel’s “Mr. Security”, as he has often been dubbed, and he has defended his decision saying: “Our enemies begged for a ceasefire.
“In times of emergency, when making decisions crucial to security, the public can’t always be privy to the considerations that must be hidden from the enemy,” he said.
His Likud party has hit back at suggestions he will be forced to call early elections, saying Netanyahu will take over the defence portfolio at least temporarily in addition to the premiership, foreign affairs and health portfolios he already has.
A Likud spokesman said Netanyahu would continue consultations on Thursday aimed at stabilising his coalition.
There has long been speculation that Netanyahu may call elections before they are due in November 2019, particularly with police having recommended charges against him in two corruption probes.
The attorney general is expected to announce in the coming months whether to pursue charges against him, and some analysts believe he would be better positioned to combat them with a fresh electoral mandate.
But Netanyahu would want to make the move at the most advantageous time and likely not with public attention focused on the Gaza ceasefire.
The Gaza violence had erupted on Sunday with a botched Israeli special forces operation inside the territory that turned deadly and prompted Hamas to vow revenge.
Palestinian militants responded with rocket and mortar fire, as well as an anti-tank missile that hit a bus that Hamas says was being used by Israeli soldiers. A soldier was severely wounded in the attack.
Around 460 rockets and mortar rounds were fired from the Gaza Strip, wounding 27 people, three of them severely.
A Palestinian labourer from the occupied West Bank was killed when a rocket hit a building in the Israeli city of Ashkelon.
Israel hit back with widespread air strikes on some 160 targets in the Gaza Strip before the Egyptian-brokered truce took effect on Tuesday. Seven Gazans were killed.
The escalation came despite Netanyahu’s decision to allow Qatar to transfer millions of dollars in aid to Gaza for salaries as well as fuel to ease a chronic electricity shortage.
The cash transfers had led to calmer protests along the border after months of deadly unrest.
But they also drew criticism from within Netanyahu’s own government, and Lieberman slammed them in announcing his resignation.