Benjamin Netanyahu expected to call early elections after saying Israel is impossible to run

The Israeli Prime Minister said the current political situation must change

Israel could be heading to early elections after the Prime Minister said it was impossible for the current political situation to continue.

Benjamin Netanyanhu told ministers that his Government had been made unstable as tensions over the “Jewish state” bill threaten to undermine his leadership.

Issuing what appeared to be a thinly-veiled threat to dissolve the Government, he said that the “important missions” ahead could only be carried out with stability and sound management, the Times of Israel reported.

“Unfortunately, this is not what’s happening,” he added. “Lately, almost not a day goes by without diktats, or threats, or threats to resign or ultimatums of all sorts.

“I hope that we can restore sound management [of state affairs]. It is what the public expects of us. Only in this way, can we run the state. And if not, we’ll draw the necessary conclusions.”

Israeli media are predicting elections will be called for March after a highly anticipated meeting between Mr Netanyahu and a key coalition partner failed to iron out their differences on Monday.

The meeting with Yesh Atid's leader, Yair Lapid, followed weeks of debate over budget provisions including a planned increase for defence, and the party's opposition to the current version of a contentious bill that would enshrine Israel's status as a Jewish state.

The discussions come at a turbulent time, following a wave of attacks and unrest in Jerusalem including murders in a synagogue.

Israeli finance minister Yair Lapid reportedly failed to reach an agreement with the Prime Minister (AP)

Netanyahu “decided to take Israel to unnecessary elections last night,” Mr Lapid told an economic conference on Tuesday, adding that despite Israel's 50-day war in Gaza over the summer, concerns over the strip remain.

Mr Lapid believes the Prime Minister has veered too far to the right by supporting the expansion of Jewish settlements in east Jerusalem and the West Bank, while failing to advance the peace process with the Palestinians.

“Netanyahu has chosen to go to elections when the situation is particularly difficult,” said Yaacov Peri, Yesh Atid's science minister. “There is a crisis with the United States and the condition of the middle class is deteriorating.”

Mr Netanyahu could complete the remainder of his two-year term without the support of Yesh Atid by bringing ultra-orthodox parties into his coalition Government.

But representatives have so far shown no enthusiasm to join him and vocally supported early elections.

Danny Danon, the chairman of Mr Netanyahu's Likud party, blamed Mr Lapid for “dragging Israel to an unnecessary, and expensive, early election”.

“After the Likud is victorious at the ballot box, we must be sure not to repeat mistakes of the past and form the next coalition government with loyal and like-minded parties that are interested in serving as true partners in leading our great country,” he said.

His statement was taken to suggest a far-right coalition with orthodox parties who support more settlements and Jewish-oriented legislation.

Mr Netanyahu has been defending the latest draft of the so-called “Jewish state” bill from both liberals, who say it is discriminatory, and right-wing politicians, who claim it does not go far enough.

He has presented 14 “principles” as a more moderate version of previous suggestions by right-wing parties that were criticised by human rights and pro-Palestinian groups.

Critics say the law is undemocratic to Israel’s Arab and other minority populations but Mr Netanyahu insists it would guarantee equal rights for citizens.

The latest draft defines Israel as the “nation state of the Jewish people” and enshrines democracy, the right of return, Hebrew law, the protection of holy places, and the ability of all residents “regardless of religion, race or nationality” to preserve their culture and heritage.

Additional reporting by AP