Prime Minister Benjamin Netanyahu received extra time on Monday to form a new government, President Reuven Rivlin announced, granting the right-wing leader a two-week extension until May 29.
In office for a decade, Netanyahu won a record fifth term in an April 9 parliamentary election, largely seen as an effective referendum on his leadership since he faces possible indictment in three corruption cases. He denies the charges.
Netanyahu is negotiating terms with nearly all the right-wing, nationalist and religious parties that form his outgoing government. No party in Israel has ever won an outright majority in the 120-seat Knesset, making coalition governments the norm with political negotiations often dragging on. One issue in the current talks is the Gaza Strip.
Former defense minister Avigdor Lieberman, whose ultra-nationalist Yisrael Beitenu party is negotiating with Netanyahu, said on Monday after the extension was announced that talks would continue, but strategy over the Gaza Strip remained a sticking point.
Accusing Netanyahu of appeasing Gaza Strip's Hamas rulers by allowing Qatari donations into the enclave, Lieberman said: "On the matter of the Strip I think that our stance is very clear and to my regret the rifts there are still very wide."
Lieberman, whose party has five seats in parliament, said he wanted to be reappointed as defence minister. In accordance with Israeli law, Netanyahu received an initial 28-day period to form a government, with a 14-day extension possible and traditionally granted. The initial period ends on Wednesday.
On Saturday, a spokesman for Netanyahu said the prime minister would seek the extra time, citing a busy schedule that included Jewish holidays, national memorial days and a surge of deadly fighting with Palestinian militants in the Gaza Strip earlier this month as some of the reasons for the delay.
"Meeting with ... Netanyahu today, who explained the need for additional time to form a government, I accepted his request and granted an additional 14 days to the time allocated," President Reuven Rivlin wrote on Twitter, setting May 29 as the new deadline.
If Netanyahu fails to put together a coalition by then, Rivlin can ask another member of parliament to try. Benny Gantz, a former military chief whose centrist Blue and White party won 35 seats in the 120-member legislature, would likely be next in line.
Netanyahu's right-wing Likud also won 35 seats but has more political allies in parliament than does Blue and White, and Rivlin subsequently tapped him to form an administration.
In a letter to Rivlin requesting the extension, Netanyahu wrote that his negotiating team had already made "significant progress" towards forming a government.
Among the most pressing issues awaiting the new government will be US President Donald Trump's plan to end the Palestinian-Israeli conflict. Washington has said it will be unveiled in June. So far prospects for the plan appear dim.
A right-wing coalition in Israel would likely oppose any proposed territorial concessions to the Palestinians, who are boycotting the Trump administration over what they see as its pro-Israel bias.