As Yair Lapid's mandate to form a government entered its last day on Wednesday, the negotiations to establish the so-called "coalition for change" appeared to have stalled.
Centrist Yesh Atid leader Yair Lapid has until midnight to announce to President Reuven Rivlin whether he has a government before the mandate officially expires.
Sources familiar with the details of the talks said that many outstanding issues have already been resolved, including ministerial appointments.
There is still disagreement, however, over the demands put forward by Ayelet Shaked from Yamina. She apparently asked to be given a seat on the committee for judicial appointments, a position already promised to Labor leader Merav Michaeli.
Shaked said she would not add her vote in support of the new coalition if her demands are not met.
Another obstacle on the path to forming government appears to be the demand of Ra'am leader Mansour Abbas to reverse, or at least temporarily suspend, a law that facilitates the demolition of homes build in violation of code, most prevalent in Arab communities. The contentious Kaminitz Law was legislated by the Justice Ministry when it was headed by Shaked.
While the coalition negotiations were taking place inside a Ramat Gan hotel, demonstrators protesting the emerging government stood outside carrying signs calling the Yamina party members "traitors" for joining the political camp that opposes Prime Minister Benjamin Netanyahu.
A similar demonstration was also held outside Shaked's home. She and Yamina party leader Naftali Bennett were assigned a security detail on Sunday, after threats were made on social media accusing both of treason.
Meanwhile, some members of the Joint List, an alliance of predominately Arab parties, announced they would vote against the new coalition.
The Hadash, a communist party that makes up the Joint List, said late on Tuesday that they would not support a government that is no different in policies from the outgoing coalition. "We are voting on policies and not personalities," the Hadash party said in a statement.
Sami Abu Shehadeh, leader of the Balad faction, said if the new government was serious about equality for Arabs, he would be offered the Education Ministry to ensure young Israelis would be taught to fight racism.
If Lapid misses Wednesday's deadline, parliament will have three weeks in which to agree on a new candidate. If that fails, Israel will hold another election, its fifth in some two years.