Israeli Prime Minister Benjamin Netanyahu's Likud party on Friday denied a report he had agreed to call early elections following the resignation of a key partner in his ruling coalition.
A party spokesman said Netanyahu, who was left with a knife-edge majority in parliament after the resignation, held a crunch meeting with Education Minister Naftali Bennett.
"The prime minister told minister Bennett that rumours that a decision has been made to go to elections are not correct," the spokesman said in a statement.
"Prime Minister Netanyahu emphasised the importance of making every effort to preserve the right-wing government".
The statement was issued shortly after a source close to Bennett told AFP the two had agreed that "it would be senseless to continue" with the same coalition.
"They will set a date for elections when they meet with the (other) coalition partners on Sunday," the source said.
Defence Minister Avigdor Lieberman quit Wednesday over a ceasefire deal for Gaza, taking the rest of his hawkish Yisrael Beitenu party with him and leaving the coalition with a single seat majority in parliament.
Bennett, Netanyahu's other main right-wing rival and head of the religious nationalist Jewish Home party, has threatened to quit unless he is given Lieberman's job.
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