Bayit Yehudi issued an ultimatum for Prime Minister Benjamin Netanyahu on Tuesday, demanding the appointment of MK Ayelet Shaked as justice minister as a condition for the party joining the new government.
Netanyahu has until midnight Wednesday to present his new government to President Reuven Rivlin, but sensing desperation with the announcement by Yisrael Beytenu leader Avigdor Lieberman that he would not join the government, potential key coalition partner Bayit Yehudi has upped the ante.
Bayit Yehudi's demand for the Justice Ministry is based on the assumption Netanyahu wants to keep the Foreign Ministry, which could allow him to bring in additional coalition partners at a later stage.
Bennett and Shaked want to use the Justice Ministry to introduce a series of reforms in the justice system, particularly concerning the Supreme Court's authorities and limiting its ability to reject Knesset legislation.
On Tuesday, senior Likud MK Miri Regev accused Bayit Yehudi of intransigence and scuppering the chances for a "right-wing nationalist government."
The prime minister has already asked Rivlin for an extension to the period allocated for forming a government. The Wednesday night deadline cannot be extended in this round of coalition negotiations.
Netanyahu on Tuesday summoned Likud's negotiating team to discuss the crisis in negotiations with Bayit Yehudi, but has yet to arrange a meeting with Bayit Yehudi leader and former protege Naftali Bennett.
Bennett convened his own party on Monday evening for a meeting, where he detailed the problems raised by the agreements signed with the other coalition partners. He asked Bayit Yehudi MKs to give him the mandate to continue negotiating with Netanyahu in any scenario that would develop, a request they granted.
Bayit Yehudi is fuming over the Likud coalition agreement with Shas, which gives the Sephardi Orthodox party control over the Ministry of Religious Services. Bayit Yehudi is concerned that this will mean the reforms it has made in the ministry will be overturned, to the detriment of religious Zionist sector.
Party officials said that despite the Likud's party's offers of compromise, they have yet to find a worthy solution to the dispute over the Religious Services Ministry.
When the issue of Shas receiving the ministry was first raised, Bennett stated on Twitter that giving them the ministry would put an end to negotiations with Bayit Yehudi.
The departure of Leiberman and his six seats on Monday has left Netanyahu with what looks likely to be a narrow 61-member government, if he can in fact put a coalition together.
If Netanyahu fails to present his government, the president then repeats the process – either by offering the mandate to Netanyahu again or giving it to someone else. If another 100 days pass without a coalition being formed, new elections are called and the entire process begins anew.
Meanwhile, Lapid visited the Ynet studio on Tuesday and said "there was no way" his Yesh Atid party would sit in the next government, especially given the coalition agreement recently signed between Netanyahu and the ultra-Orthodox parties.
The Yesh Atid leader added that he believed the "government being formed now…is the wrong government for the state of Israel," and that Netanyahu "decided to do anything in order to stay in power, including things opposing what he did a year ago."