Benjamin Netanyahu is backing a compromise proposal in the Knesset that could prevent Israel from holding a fourth election in 19 months.

Sunday night's proposal, which came after the Blue and White party backed down from the threat of an 'anti-Bibi bill',  would postpone the deadline for passing a state budget from August 25 to November.

The bill is expected to receive permission from the Knesset House Committee on Monday or Tuesday and be brought to a vote in the plenum by Wednesday.

"We are giving it a chance," a source close to the Israeli Prime Minister, told the Jerusalem Post.

“This is a very important step of goodwill, but it is far from being a solution to the problem,”  Knesset Speaker Yariv Levin, of Likud,  told Army Radio on Monday morning.

Benny Gantz's Blue and White Party released a statement welcoming what it called the Likud’s recognition of the need to uphold political and social stability in Israel.

"Blue and White will do everything in its power to spare the people of Israel deleterious elections during one of the gravest crises in the country's history," the party said.

 "We will support amendments to the existing law that ensure the allocation of funds to rehabilitate our economy. Citizens of Israel deserve utmost reassurance and stability at this time, and we will continue acting to that end."