Israeli Prime Minister Benjamin Netanyahu and political rival Benny Gantz were nearing a deal on Tuesday to form a national emergency government to battle the coronavirus crisis and end the country's unprecedented political deadlock.
Mr Gantz's 28-day mandate to put together a ruling coalition after last month's inconclusive election was due to expire at midnight, but President Reuven Rivlin, who is overseeing the coalition talks, extended it for two days.
Mr Rivlin did so, his office said, "on the understanding that they are very close to reaching an agreement."
Mr Gantz and Mr Netanyahu met overnight in an effort to settle their differences, after which the sides said they had made "significant progress". A second meeting on Tuesday ended with a joint statement saying the negotiating teams would resume talks on Wednesday evening, hours before the new deadline.
The impasse, after national elections in last April and September and again this March, raised the prospect of a fourth ballot, complicating any plans for economic recovery once the coronavirus outbreak ease.
During the past year of stalemate, Israel has been run by a caretaker government under the leadership of Mr Netanyahu, who is under criminal indictment on corruption charges which he denies.
Without a deal between the right-wing Mr Netanyahu and centre-left Mr Gantz, it will be up to parliament to pick a candidate who would then have 14 days to form a government. Failure to do so would automatically trigger a snap election.
Israeli media reports said the deal being formulated would see Mr Netanyahu, in power consecutively for the past 11 years, serving as prime minister for another 18 months after which Mr Gantz, a former armed forces chief, would take over.
"Netanyahu, this is our moment of truth. It's either a national emergency government or, God forbid, a fourth election which would be expensive and, in this crisis period, gratuitous," Mr Gantz said on Monday.
The enormity of the coronavirus crisis, Mr Gantz said, had led him to break his campaign promise not to sit in a government led by a prime minister facing criminal charges.
Israel has reported almost 12,000 Covid-19 cases and 117 deaths. Restrictions to stem coronavirus transmission have confined most Israelis to their homes, forcing many businesses to close and sending unemployment soaring to more than 25 per cent.
Mr Netanyahu said on Monday his cabinet could formulate an "exit strategy" as soon as this weekend, though he cautioned restrictions on the economy and education would be relaxed gradually and that there would be no full return to routine before a coronavirus vaccine is discovered.
