On Wednesday night, the High Court found that there was no justification for any intervention that would prevent Mr Netanyahu from being tasked with forming a government.
Mr Netanyahu's trial in three corruption cases is due to begin on May 24.
The High Court accepted however, that there were “serious difficulties” arising from controversial clauses in the coalition agreement and was strongly critical of Mr Netanyahu’s continued premiership.
In its judgment, the justices wrote: “The legal conclusions we reached does not diminish the severity of the pending charges against MK Netanyahu for violations of moral integrity and the difficulty derived from the tenure of a prime minister accused of criminal activities.”
The court also said that Tuesday’s announcement by Blue and White and Likud that they would seek to amend problematic clauses in the coalition agreement contributed to its decision. The agreement includes controversial clauses, including one that could see ministers give up their Knesset seats in favour of others – but not according to the order in which they appeared on each party’s electoral list.