Benjamin Netanyahu, the Prime Minister, has signalled he might call an early election – a decision that could put Middle East peace efforts on hold for months and cast more uncertainty on Israel's deliberations over whether to attack Iran's nuclear programme.
Mr Netanyahu has presided over an awkwardly diverse yet unusually resilient coalition for three years. But while he is under fire for his handling of Iran and the Palestinians, it is domestic complications that appear to be driving the coalition unrest.
The Supreme Court has ordered the government to dismantle illegal West Bank settlement outposts. This faces tough opposition from hardline coalition allies who have a history of toppling even right-leaning governments like Mr Netanyahu's over such issues.
The court's order to scrap exemptions to the military draft for thousands of religious seminary students by 1 August also threatens the coalition.
Mass protests against the high cost of living are expected for the second summer in a row.