The Knesset voted unanimously on Wednesday in favour of a law affirming the conversions carried out by the IDF's rabbinate, despite warnings by the Charedi parties of a political crisis.
The Shas leader, Interior Minister Eli Yishai, said following the vote that: "If the law goes ahead, we will consider leaving the coalition".
Shas and United Torah Judaism both oppose the law which will give conversions performed in the IDF the same status as those carried out by the civilian conversion courts of the Chief Rabbinate.
The military conversion will have no need, according to the law, for authorisation from any other rabbinical authority. Mr Yishai attacked the law, saying that it would bring about "two different systems of conversion and erode the authority of the Chief Rabbinate".
Chief Rabbi Shlomo Amar has threatened to withhold his authorisation from all conversions if the bill passes, and even raised the possibility of resignation.
Yisrael Beiteinu, the party which sponsored the law, insisted on bringing it to a vote despite the opposition of its coalition partners.
Prime Minister Binyamin Netanyahu tried to postpone the vote in the hope of avoiding a coalition crisis, but Yisrael Beiteinu leader, Foreign Minister Avigdor Lieberman, refused, saying: "Shas has got its way on so many things and now it wants to take control also of the army."
The law passed by 74 votes to 18 on its preliminary reading, with the support of Mr Netanyahu's Likud party members, and Shas called an emergency meeting at the house of its spiritual leader, Rabbi Ovadia Yosef. So far the party is not planning to leave the government but it has warned that it will not remain in the coalition if the law passes unchanged to the final steps of legislation.
The rabbis connected to Shas and United Torah Judaism do not seem about to back down either, and could well take matters into their own hands and order their parliamentary representatives to pull out of the coalition ahead of any moves by the parties themselves.
However, advisers to the prime minister assured Mr Yishai after the vote that a deal would be reached with Rabbi Amar whereby he would still be given the right to veto any conversions carried out in the army and that Shas's demands would be met before the final votes on the law.
Mr Netanyahu will try to take advantage of the fact that the law has only passed a preliminary Knesset reading and hope that Yisrael Beiteinu will be satisfied with the symbolic victory. In the meantime, he will try to water it down by quietly allowing the Chief Rabbi his say on the conversions, while continuing with the military programme.
He will not succeed in making all sides happy, but if he manages to reduce their anger enough to keep them in the coalition, he can carry on with his balancing act.