The heads of the parties behind the so-called "coalition for change" were to meet Tuesday to finalize an agreement to replace the government of Benjamin Netanyahu, a day before the mandate to do so expires.
Centrist Yesh Atid leader Yair Lapid, who has until Wednesday night to form a government, was meeting in Ramat Gan with right-wingers Naftali Bennett of Yamina, Avigdor Liberman of Yisrael Beytenu and Gideon Saar of New Hope to finalize the agreement.
Sources said that the terms would be upon by the end of Tuesday and that Lapid would then inform President Reuven Rivlin that he has formed a government.
The sources said not all matters of contention had been finalized and that negotiations would continue, but a resolution of the outstanding issues was expected.
Netanyahu, who is facing an end to his 12-year rule as prime minister, has been making repeated efforts to scupper the nascent deal by his political opponents.
On Tuesday, Rivlin's legal advisor Udit Corinaldi-Sirkis rejected a claim by Netanyahu's Likud party that a new coalition that had Bennett as prime minister would be unlawful as it was Lapid who was tasked with forming the government.
Likud based its claim on Basic Law: The Government, which it said meant that Lapid must serve as prime minister first even when there is a power sharing agreement.
The claim came despite Netanyahu earlier in the week offering Saar the first spot in a rotation government with Likud.
Corinaldi-Sirkis said there was no provision in the law to prevent Lapid from naming Bennett as the first to head the government.
She said that Netanyahu had already submitted a similar question before his own attempt to form a new government ended in failure, and had been received the same response.
"As you may recall," Corinaldi-Sirkis wrote to Netanyahu's attorney Michael Ravilo, "on May 4 you asked me about my legal opinion on whether a member of Knesset tasked with forming a government could be second in a rotation of prime ministers and I told you that this was indeed the case, based on Basic Law: The Government."
Among matters still undecided in the coalition negotiations was a Yamina demand that its No. 2 Ayelet Shaked be assigned to the committee on judicial appointments instead of Labor chair Merav Michaeli.
If Shaked's demand is met, the committee would have a right-wing majority in appointing judges to the Supreme Court.
Shaked in her former position as justice minister selected justices who were more right-leaning and less inclined to the judicial activism promoted by Supreme Court Chief Justice Esther Hayut.
Unlike Michaeli, both Shaked and New Hope leader Gideon Saar - who is also tapped to join the committee - have said they would like to reform the judicial system and curb the powers of the courts to overturn Knesset legislation.
Another issue that was yet to be resolved was the demand by the Islamist Ra'am party to be given chairmanship of the Knesset Internal Affairs and Environment Committee.
Ra'am leader Mansour Abbas has said he would seek to reverse legislation that allows the government to demolish buildings constructed in violation of regulations.
The law was designed to prevent illegal construction that is prevalent in Arab communities. The Arab sector has a shortage of legally built houses that it says its discriminatory obstacles in obtaining planning permission.
Shaked and Abbas met Monday to try to resolve their differences, but no statement was made at the end of the meeting to indicate that a solution had been found.
There was another disagreement in the nascent coalition over ministerial positions, with Benny Gantz's Blue & White party insisting that one of its lawmakers be appointed minister of agriculture, which had already been promised to Yisrael Beytenu.
Liberman on Monday slammed Blue & White over its position, accusing Gantz of trying to derail the emerging agreement as if a government is not formed and new elections are called, he would become prime minister in November under the terms of his April 2020 coalition agreement with Netanyahu.
If Lapid does announce Tuesday that he has succeeded in forming a new coalition, Knesset Speaker Yariv Levin, a Likud MK and a close ally of Netanyahu, will likely delay the Knesset vote to approve the government until the last possible moment.
This would allow members of the current right-wing, religious coalition more time to pressure Yamina and New Hope members to defect, thereby thwarting the formation of the new government.
By law the Knesset must vote to approve a government within one week of the president being informed that a coalition has been agreed.
On Monday, the Knesset appointed a security detail to protect Lapid, Bennet and Shaked after they received threats from Netanyahu supporters and due to the protesters camped outside their homes who have accused them of treason.