Blue & White Chairman and Defense Minisiter Benny Gantz said his party will vote in favor of a bill, calling to disperse the Knesset and hold another election.
On Wednesday, the Knesset will vote on a motion of no-confidence proposed by the opposition, normally a formality that is voted down virtually automatically by the government coalition.
"Netanyahu has decided to dismantle the government and drag the State of Israel into elections," said Gantz. "[Prime Minister Benjamin] Netanyahu promised unity, promised there would be no tricks, promised responsible management of the coronavirus crisis. Netanyahu did not lie to me - he lied to you," he said.
"Millions of citizens are heartbroken, businesses are closing down and more and more people are in distress and poverty, all while the State of Israel is still without a budget. So, Blue & White will vote to dissolve the Knesset."
He nevertheless left the lifeline for Netanyahu if he agrees to pass the two-year budget. "Netanyahu, the burden of proof is on you. Immediately table the [two-year] budget for the government, make sure to pass it and ensure unity."
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Prime Minister Benjamin Netanyahu and Benny Gantz
(Photo: Alex Kolomoisky, Yariv Katz )
Coalition Chairman MK Miki Zohar issued a response shortly after Gantz's speech, calling the decision "a new low".
"While the Likud works only for the public in dealing with the coronavirus crisis, Blue & White work only for Benny Gantz to become prime minister," he said.
"They are dissolving the Knesset and dismantling the government while harming the citizens of Israel for a political whim."
The unity government has spared over the structure of the 2021 budget with Netanyahu and his right-wing coalition partners willing to vote only for a very short term version of the budget, contrary to the coalition agreement.
If the long-term budget is passed, Netanyahu would be forced to commit to the rotation agreement next year and yield power to Gantz. But if the government collapses, Netanyahu would remain as prime minister throughout the three-month election campaign and until a new coalition is formed.
Netanyahu would also benefit by further delaying the budget talks. That would give more time for the coronavirus vaccine to arrive and the economy to begin recovering next year, presumably giving him a better chance in elections.
Opinion polls predict that Netanyahu's Likud Party would still emerge as the largest party in parliament in the next election, but with far fewer seats than it currently has. Gantz's Blue and White has plummeted even further, making it in both their interests to compromise and avoid a new election.
Lawmakers on both sides of the aisle, however, believe the no-confidence bill has a good chance of passing, spelling the immediate dissolution of the government and the unprecedented launch of Israel’s fourth general election in two years.
On Tuesday, both Minister of Economy Amir Peretz and Minister of Welfare Itzik Shmuli from the Labor party, which is part of the coalition, said they would vote with the opposition to dissolve the government.
The MediaLine, Associated Press contributed to this report