Israeli Prime Minister Benjamin Netanyahu will take over the defense portfolio after the resignation of Avigdor Lieberman on Wednesday, a spokesman for his Likud Party said on Friday.
Earlier Netanyahu met with key coalition partner Naftali Bennett of the Jewish Home Party, who had sought the post for himself, but the two men emerged without an agreement.
Netanyahu's right-wing coalition government was rocked by Lieberman's resignation in protest at a ceasefire reached between Israel and the Islamist group Hamas in the Gaza Strip.
Lieberman's far-right Yisrael Beitenu party has quit the coalition and its five MPs have withdrawn support for the government.
On Friday, Lieberman toured southern Israel and accused Netanyahu of being soft on terrorism. He said Netanyahu's Gaza policy is strengthening Hamas.
"It's impossible that after Hamas launches 500 rockets at the Israeli border communities. the heads of Hamas are actually getting immunity from the Israeli cabinet," he told reporters.
After Bennett and Netanyahu's meeting, a spokesman for the PM's Likud Party said that for now Netanyahu would handle the defense portfolio himself.
The PM’s move fueled speculation of an early election.
The premier spoke by phone with the rest of his coalition partners, urging them to "make every effort not to bring down the right-wing government" and to prevent the left from getting into power, the spokesman said.
A source close to Bennett said that after his meeting with Netanyahu "it became clear ... there was a need to go to elections as soon as possible with no possibility of continuing the current government."
Israeli media reported that other coalition partners would oppose Bennett, who leads an ultra-nationalist, religious party, becoming defense minister.
An election date would be decided on Sunday, the source close to Bennett said.
Finance Minister Moshe Kahlon, who heads the centrist Kulanu party, has also called for a vote to be held before the scheduled date next November.
Before the crisis Netanyahu's coalition had 66 seats in the 120-seat parliament. The loss of Lieberman's five has brought him down to a perilous 61. Losing Bennett's eight means Netanyahu would lose his majority.
Opinion polls show that Netanyahu's Likud would be likely to remain the dominant party after a parliamentary election.
Netanyahu, a conservative serving his fourth term as premier, is under investigation for corruption. Commentators say he may agree to bring the ballot forward in order to win a renewed mandate before the attorney-general decides whether to indict him.
