Israel’s defence minister Avigdor Lieberman has abruptly resigned his post in protest against a ceasefire reached with Gaza militants.
The move has rocked the Israeli political scene and seemed likely to bring about early elections.
Mr Lieberman termed the ceasefire ending two days of intense fighting “surrender to terrorism”, and said he could no longer serve a government that endorsed it.
His resignation delivers a major blow to Mr Netanyahu’s coalition government and sparked immediate calls for early elections.
Mr Lieberman said he hoped that in the coming days a date would be set for a new vote and the opposition parties joined his call.
But with elections currently set for November 2019, it is unlikely to last that long in lame-duck form.
Mr Lieberman’s resignation will take effect in 48 hours and Mr Netanyahu will take over on an interim basis.
Residents of southern Israel had greeted news of the ceasefire with anger as dozens of protesters in the rocket-battered town of Sderot chanted “Disgrace!” at what they saw as the government’s capitulation to violence and its inability to provide them with safety.
Mr Netanyahu presented the decision to step back from a full-blown conflict as a unified one made by his security cabinet and based on the military’s recommendations.
But Mr Lieberman and education minister Naftali Bennett, another hard-line member of the Security Cabinet, later expressed reservations, saying they favoured a stronger response.
Mr Netanyahu defended his actions at a memorial ceremony for Israel’ first prime minister, David Ben-Gurion.
“I see the big picture of Israeli security that I cannot share with the public,” he said.
“Our enemies begged for a ceasefire and they know well why. I cannot detail our plans for the future.
“We will dictate the time and circumstances that are right for Israel and are right for the security of our people.”
“In times like these, leadership is not doing the easy thing. Leadership is doing the right thing, even if it is hard. Leadership is sometime facing criticism,” he added.
The Israel-Gaza frontier remained quiet overnight.
Seven Palestinians, including five militants, were killed.
In Israel, one person was killed in a rocket strike and three were critically wounded.
With air raid sirens wailing throughout southern Israel and the explosions of airstrikes thundering in Gaza, the two sides had appeared to be on the verge of their fourth war in a decade.
Instead, Gaza’s Hamas rulers abruptly announced a ceasefire and Israel’s security cabinet ended a seven-hour discussion with an apparent decision to hold its fire.
The news was greeted with celebrations in Gaza, with Hamas declaring victory in the latest round of violence, which was triggered by a botched Israeli raid on Sunday that left seven Palestinian militants and a senior Israeli military officer dead.