Yair Lapid is seeking to forge a diverse alliance the Israeli media has dubbed a bloc for "change", which includes the nationalist hardliner Naftali Bennett as well as Arab-Israeli lawmakers.
Israeli nationalist hardliner Naftali Bennett has said he would join a governing coalition that could end the rule of the country's longest-serving leader, Prime Minister Benjamin Netanyahu.
"I will do everything to form a national unity government with my friend Yair Lapid," Bennett said after meeting with his own party, Yamina on Sunday.
The pair have until Wednesday 11:59 pm local time (2059 GMT) to complete a deal in which they are expected to each serve two years as prime minister in a rotation deal.
A unity government would end the cycle of deadlock that has plunged the country into four inconclusive elections over the past two years.
It also would end, at least for the time being, the record-setting tenure of Netanyahu, the most dominant figure in Israeli politics over the past three decades.
'Danger to security'
In his own televised statement, Netanyahu accused Bennett of betraying the Israeli right wing.
He urged nationalist politicians who have joined the coalition talks not to establish what he called a “leftist government.”
“A government like this is a danger to the security of Israel, and is also a danger to the future of the state,” he said.
The prime minister responded by saying a Lapid-Bennett government will weaken Israel.
Netanyahu, 71, has attempted to dissuade opponents from forming a "government of change", making counter-offers to buy him more time as premier.
Netanyahu, who faces trial on fraud, bribery and breach of trust charges which he denies, has held onto power through a period of political turmoil that saw four inconclusive elections in under two years .
The new coalition's parties would have little in common apart from a plan to end the 12-year-run of Netanyahu.
An anti-Netanyahu coalition would be fragile, and require outside backing by Arab members of parliament who oppose much of Bennett's agenda.
It would be expected to focus on the economic recovery from the Covid-19 pandemic, while setting aside issues on which members disagree, such as the role of religion in society and Palestinian aspirations for statehood.
Preventing another vote
Most Israeli media had predicted Bennett would agree to a deal under which he would replace Netanyahu as prime minister and later give way to Lapid in a rotation agreement.
Such a deal had already been reported as close when Israel launched military strikes in Gaza on May 10, which prompted Bennett to suspend discussions.
The Israeli attacks ended with a ceasefire after 11 days. Bennett has maintained public silence in recent days.
Bennett, a former Netanyahu aide turned rival, said he was taking the dramatic step to prevent yet another election. While sharing Netanyahu's nationalist ideology, Bennett said there was no feasible way for the hard-line right wing to form a governing majority in parliament.
“A government like this will succeed only if we work together as a group,” he said.
He said everyone “will need to postpone fulfilling all their dreams. We will focus on what can be done, instead of fighting all day on what’s impossible.”
Bibi's counter offer
Netanyahu, 71, made a three-way counter-offer on Sunday to stand aside in favour of another right-wing politician, Gideon Saar.
Under Netanyahu's blueprint, Saar would serve as prime minister for 15 months, Netanyahu would return for two years, and Bennett would then take over for the rest of the government's term.
"We are at a fateful moment for Israel's security, character and future, when you put aside any personal considerations and take far-reaching and even unprecedented steps," Netanyahu said in a video statement about the proposal.
However, Saar, a former Likud cabinet minister, swiftly rejected the offer, writing on Twitter: "Our position and commitment are unchanged - to end Netanyahu's rule."
Netanyahu's rivals have cited his corruption case as a main reason why Israel needs a new leader, arguing that he might use a new term to legislate immunity to shield himself.
If Lapid, 57, fails to announce a government by Wednesday, a new election, the fifth since April 2019, is likely. Bennett has said he aims to avoid it.