Israeli Defence Minister Moshe Yaalon has resigned, warning that Israel has been taken over by “dangerous and extreme elements”.
Prime Minister Benjamin Netanyahu seeks to bring hardliner Avigdor Lieberman into the coalition, possibly as defence minister.
The deal would shore up Mr Netanyahu’s one-seat majority in parliament.
Mr Lieberman has a reputation for inflammatory comments and takes a hawkish stand towards the Palestinians.
If his six-seat Yisrael Beiteinu party joins the coalition, it would become the most right-wing in Israel’s history.
Mr Yaalon said “I informed the PM that after his conduct and recent developments, and given the lack of faith in him, I am resigning from the government and parliament and taking a break from political life.”
Right-wing political figures have also criticised Mr Yaalon for backing a decision to charge an Israeli soldier who killed a wounded Palestinian attacker in March, in a case which split opinion in Israel.
At a news conference on Friday, Mr Yaalon said: “I fought with all my might against manifestations of extremism, violence and racism in Israeli society, which are threatening its sturdiness and also trickling into the IDF [Israel Defence Forces], hurting it already,”.
Mr Lieberman’s appointment is confirmed, it would mark a return to government for the controversial politician who stepped down in 2012 when he was investigated for breach of trust. He was charged and later acquitted.
Moldovan-born Mr Lieberman, who lives in an Israeli settlement in the occupied West Bank, advocates a tough line towards dealing with the Palestinians, including the overthrow of Gaza’s Hamas rulers.
France recently announced that it would host an international conference on June 3 to try to revive Israel-Palestinian peace talks, which collapsed amid acrimony in 2014.