Netanyahu's meeting on Sunday with Finance Minister Moshe Kahlon, a key coalition partner who has also pushed for early elections, was seen as a last attempt to prevent the collapse of the coalition - which now has a one-seat majority in parliament - but ended with no conclusion.
Netanyahu said heading to elections now, amid repeated violent confrontations with Gaza militants, was "irresponsible" of his coalition partners, who have been pushing for early polls since the resignation last week of Defense Minister Avigdor Lieberman over a Gaza ceasefire.
Naftali Bennett, the hardliner education minister, was widely expected to quit during a press conference held on Monday morning but instead said in a shock announcement that his Jewish Home party would give the prime minister another chance.
Unless the defense minister's portfolio is given to Bennett to rescue Israel from the serious crisis of confidence in security that it is in, there is no point in the existence of a left-wing government.
"Today, I take on for the first time the position of defence minister", said Netanyahu, speaking from Israel's defence headquarters in Tel Aviv in a statement broadcast live at the top of the evening newscasts.
Before his Sunday speech, Netanyahu met with Finance Minister Moshe Kahlon, who leads the center-right Kulanu party, which holds 10 seats in parliament.
The loss of Lieberman's Israel Beitenu faction leaves Netanyahu with control of just 61 of the 120 seats in parliament. Some commentators have reasoned that if the prime minister goes to early elections and wins big, Mandelblit might hesitate to take action against him.
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Trump said, as he as before, that he was referring specifically to news that is "fake" and not the media in general. "I don't know what happened to all those votes that disappeared at the very end".
"The meeting between the finance minister and the prime minister ended without results", the spokesman said in a statement.
"We are in one of the most complex security situations and during a period like this, you don't topple a government".
President Donald Trump will reportedly meet this week with his top national security and foreign policy advisers to talk about the details and release of its Israeli-Palestinian peace plan.
A source close to Bennett said the two had agreed that "it would be senseless to continue" with the same coalition.
An opinion poll last week suggested that Israelis, including those living outside border areas that were struck by more than 400 rockets from Gaza during the flareup, were unhappy with Netanyahu over the continued threat from the Israeli-blockaded territory. When a truce was reached through United Nations and Egyptian mediation on Tuesday, Lieberman blasted the deal as "capitulation to terror" and quit. "All Likud members want to keep serving the country for another whole year until the end of the term in November 2019".
Despite his high ratings, Netanyahu dreads fresh elections as the corruption probe against him might potentially disqualify him from the vote. The country has always been eagerly awaiting the attorney general's decision on whether to press charges.