The coalition on Monday failed to renew the bill extending Israeli law under emergency regulations, over West Bank settlements.
The bill in place since the 1967 Six Day War and renewed every five years by the Knesset will expire at the end of the month.
With a 58 to 52 majority the opposition foiled the legislation although it can directly and adversely effect the West Bank settlers.
The government will bring the bill to a vote again in the coming weeks.
Justice Minister Gideon Saar who tabled the bill had said that any member of the coalition who does not support it, will be responsible for the demise of the coalition.
One member of the Islamist Ra'am party voted no on extending Israeli law to the West Bank while the remainder of his party was absent from the vote.
Absent too was former coalition whip Idit Silman who had defected to the opposition. A no vote on her part could have resulted in her being named a renegade, which would have prevented her from joining any existing Knesset faction in the next elections.
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Defecting coalition whip with Likud supporters in Knesset on Monday
(Photo: Rafi Kotz)
Silman was promised a ministerial position in a Netanyahu – led government and a secure Knesset seat.
Bennett and his ministers slammed the Likud party for refusing to back the bill at the expense of the settlers. Likud said Bennett cannot rule and should resign.