Israeli Prime Minister Benjamin Netanyahu speaks during an event. File photo

They have until a minute before midnight (2059 GMT) Wednesday to cobble together an administration that would end 12 straight years of rule by the hawkish heavyweight, Israel's longest-ruling premier.

The high-stakes push is led by former TV presenter Yair Lapid, a secular centrist, who on Sunday won the crucial support of right-wing religious nationalist Naftali Bennett, a tech multi-millionaire.

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"The coalition negotiation team sat all night and made progress toward creating a unity government," a Bennett spokesman said in a statement, adding that further talks were scheduled for the afternoon.

But to reach a 61-seat majority in the 120-seat Knesset, their unlikely alliance would also have to include other left and right-wing parties -- and would probably need the support of Arab-Israeli politicians.

That would result in a government riven by deep ideological differences on flashpoint issues such as Jewish settlements in the Israel-occupied West Bank and the role of religion in politics.

Lapid, leader of the Yesh Atid party, was tasked with forming a government by President Reuven Rivlin after Netanyahu again failed to win a majority following Israel's fourth inconclusive election in less than two years.

Lapid has reportedly agreed to allow Bennett, who heads the Yamina party, to serve first as a rotating prime minister in a power-sharing agreement, before taking over half way through their term.

Agence France-Presse