Mr Netanyahu chose to go for broke following a day of intensive consultations after the cabinet endorsed his decision to freeze implementation of the Wye Agreement between Israel and the Palestinians.
As a result, Israeli troops will not withdraw on schedule tomorrow from another 5 per cent of the Occupied Territories. Nor will Israel release Palestinian prisoners alleged to have Israeli "blood on their hands", an issue which brought Arab protesters back on the streets last week with stones, petrol bombs and flaming tyres.
Mr Netanyahu acknowledged 10 days ago that he no longer commanded a majority in the 120-member parliament, the Knesset. Voting on a no-confidence motion was put off until next Monday. Government and opposition politicians were acting yesterday as if the countdown to the ballot box had already begun.
The Prime Minister had little or no chance of winning over hard-line dissidents, who had vowed to fight the Wye Agreement to the death. Nor was Israel's Labour opposition willing to give Mr Netanyahu a safety net, once it was clear that he was dragging his feet on the Palestinian peace deal.
Yaacov Neeman, the onlynon-party member of Mr Netanyahu's cabinet, told the Prime Minister he was resigning from the Finance Ministry and returning to his Tel Aviv law practice.
At the same time, aides to the Defence Minister, Yitzhak Mordechai, were suggesting privately that the popular former general was about to break ranks and call for new elections as the only way to save the Wye Agreement. Likud insiders speculated that he might challenge Mr Netanyahu for the leadership. Mr Mordechai, the most dovish member of the inner security cabinet, distanced himself from the Prime Minister's stubborn insistence on Palestinian reciprocity during President Bill Clinton's three-day visit to Israel, the West Bank and Gaza.
The Defence Minister privately met the US mediator in the Middle East, Dennis Ross, on Tuesday to find a way out of the Wye impasse. Mr Mordechai shares the growing anxiety of Israel's intelligence community that stagnation will lead to mayhem and perhaps to war.
The chief of military intelligence, Major-General Amos Malka, predicted on Tuesday that Palestinian protests over the prisoner releases would not desist. Israel freed 250 last month, but most of them were petty criminals.
"There is no certainty," General Malka told MPs, "that the leadership will be motivated to act against the street. The leadership knows how to ignite the masses, but it does not always know how to control them."
At Wye, Yasser Arafat, the Palestinian leader, seems to have underestimated the emotion generated by this issue when he left the choice of prisoners to Israel - just as Mr Netanyahu underestimated the determination of the ultra nationalists to bring him down, even if it might usher in a left- wing government that would yield even more to the Palestinians.
A bruising election campaign could paralyse the peace process for months. The Palestinians are in no mood to wait.Reuse content