Prime Minister Benjamin Netanyahu has refused to meet personally with the leaders of the housing protest, now into its fourth week of encampments and demonstrations.
The prime minister tried to seize the initiative this week after being caught off guard by the scale and perseverance of the protesters.
Meanwhile, cracks started to show within the protest's leadership.
Despite promises to open negotiations with the leaders of the protest movement that has galvanised much of the Israeli middle class, Mr Netanyahu's aides made it clear on Monday that he would not be meeting with them. "The public has to realise that he has a country to run," said an adviser at the Prime Minister's Office, "and Bibi is dealing now with more serious threats to Israel, as the UN vote on a Palestinian state is just around the corner."
Instead, Mr Netanyahu appointed Finance Minister Yuval Steinitz to head a committee of politicians, senior officials and business people who will meet the protesters to discuss solutions to the housing crisis and other financial pressures on the middle class.
The prime minister has also encouraged senior Likud figures to criticise the protesters and their agenda in public. Minister of Information and Diaspora Yuli Edelstein said on Monday that among the protesters were "a group of anarchists with connections to the Communist party, people without any connection to reality and are not part of the wide Israeli consensus."
David Amar, a prominent Likud mayor, said: "This isn't a real protest, it's people eating sushi and smoking nargilahs. What right do they have to yell 'Bibi go home'?" Mr Netanyahu joined the fray on Wednesday, saying that "a wave of populism is sweeping the land".
While the agenda of the protests has so far been dictated by the leadership of the first and largest tent settlement, on Rothschild Boulevard in Tel Aviv, protesters from other parts of the country complained that they had been left out of the negotiations process. This meant that the publication of a list of demands had to be postponed until a meeting on Tuesday of leaders from all the protest sites. A draft document included a wide range of reforms, including the building of public housing, free kindergarten for children from the age of three months, a higher minimum wage and higher corporate and capital gains taxes.
The government has yet formally to address these demands and, despite the protesters' opposition, went ahead on Wednesday with a Knesset vote authorising Mr Netanyahu's reform of planning procedures. The protesters claim that the reform will not bring house prices down or provide public housing and promised a massive demonstrations this weekend.
In an effort to discredit the protesters, the government leaked details of links between their leaders and left-wing parties and NGOs. The protest leaders have repeatedly said that their agenda is not political. But many opposition figures, including Kadima leader Tzipi Livni, while supporting the protesters, have stayed away from Rothschild Boulevard to avoid being "tainted".