Failure to pass the budget by November 14 would have brought down the government that was sworn into office in June, leading to the fifth election in barely three years.
Israel's parliament has passed a national budget for the first time in three years, avoiding a November deadline that would have triggered fresh elections.
MPs approved on Thursday a 609 billion shekel ($194 billion) spending plan for 2021 and are to resume debate later in the day on a 573 billion shekel package for next year.
Prime Minister Naftali Bennett celebrated on Twitter, writing that “after years of chaos – we formed a government, we overcame the Delta variant, and now, thank God, we passed a budget for Israel.”
The legislature voted 61-59 vote in favour of the 2021 budget in a test for Bennett's coalition of right-wing, centrist, left-wing and Palestinian parties.
Former Prime Minister Benjamin Netanyahu had addressed lawmakers during the debate, accusing Bennett of leading "a government of liars".
"We must bring down this irresponsible government," he told MPs.
Bennett retorted that the opposition under the former premier's leadership was seeking only "chaos."
"We want stability," he said.
Bennett clears hurdle
Marathon overnight voting on budget bills in the Knesset, Israel's parliament, was a major hurdle for the new government headed by Bennett, whose fractious coalition holds a narrow majority.
Failure to pass the budget by November 14 would have brought down the government that was sworn into office in June and triggered a fifth election in barely three years, giving Netanyahu an opportunity to return to power.
The ruling coalition headed by Bennett includes eight parties from across the political spectrum and has a razor-thin margin of 61 seats in the 120-member assembly.
Israel entered a prolonged political crisis after elections in April 2019, when a right-wing party that had been allied with Netanyahu refused to sit in a government with him while he faces criminal indictments. The next two years saw four successive deadlocked elections, and a parliament dissolved in 2020 because it failed to pass a budget.
The government formed in June includes parties ranging from ultranationalists to Palestinians united by little more than a desire to avoid another Netanyahu-led government or more elections.