Authorities said on Sunday they had established an evidentiary foundation on which to charge Mr Netanyahu and his wife Sara with accepting bribes, fraud and breach of trust.
The long-running investigation into the prime minister centres on suspicions he promoted regulatory changes worth hundreds of millions of dollars to telecoms company Bezeq, in return for favourable coverage on its news website, Walla.
Police have already recommended Mr Netanyahu face corruption charges in two other cases – one alleging he accepted almost $300,000 in lavish gifts from wealthy patrons over a decade and another claiming he traded advantageous legislation for positive coverage in a newspaper.
The prime minister maintains he is innocent and insists the accusations amount to an orchestrated media witch-hunt.
In a statement released after the announcement by police, Mr Netanyahu said the decision to pursue charges against him had been taken with “no legal basis”.
“The police recommendations regarding me and my wife don’t surprise anyone,” he added. “These recommendations were decided upon and leaked even before the investigation began.”
The Bezeq case – Case 4000 – is considered the most serious facing Mr Netanyahu.
Two of his top confidants have turned state witness and are believed to have provided police with incriminating evidence.
The prime minister was also Israel’s communications minister until last year, and oversaw industry regulation.
Former journalists at the Walla news site have attested to being pressured to refrain from negative reporting about Mr Netanyahu.
Police say the investigation, which included the testimony of 60 witnesses, revealed Mr Netanyahu and Bezeq boss Shaul Elovitch engaged in a “bribe-based relationship”.
Police are also recommending charges be brought against Mr Elovitch and members of his family.
“The most serious bribery case yet leaves no room for doubt: a prime minister who is accused of the most serious offence for a public servant in the Israeli rulebook, cannot keep serving one minute longer,” said Tamar Zandberg, head of the left-wing opposition Meretz party.
“The prime minister has no moral mandate to keep his seat and must resign today. Israel must go to elections.”
Other opposition parties quickly joined the call for Netanyahu to resign.
Additional reporting by AP
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