The most right-wing component of the Netanyahu government hit a crossroads this week when the prime minister openly contemplated what could happen to the settlements following the establishment of a Palestinian state.

Economics Minister Naftali Bennett, leader of Habayit Hayehudi, indirectly accused Benjamin Netanyahu of a “loss of moral wits” after the Prime Minister’s Office briefed reporters that Mr Netanyahu envisaged settlers living as a Jewish minority in the Palestinian state.

The briefing was a clarification of Mr Netanyahu’s statement at a press conference in Davos on Friday, where he said: “I do not intend to evacuate any settlements or uproot a single Israeli.”

In response, Mr Bennett launched an unprecedented attack on Mr Netanyahu, saying that “whoever considers Jews in the land of Israel living under Palestinian rule undermines our presence in Tel Aviv”.

The minister’s harsh statements precipitated a 48-hour crisis in which Mr Netanyahu’s aides warned he would be fired if he did not apologise. By Wednesday evening, Mr Bennett’s office releasing a statement saying: “If the prime minister was offended by my words, I am sorry. I had no intention to cause any offence. I respectfully apologise.”

But this is hardly an end to the saga. Mr Bennett has warned that if the government accepts a US proposal that includes recognising the pre-1967 borders, his party would exit the coalition. The alliance within the government between Habayit Hayehudi and centrist Yesh Atid also seems to be over. Last Thursday, Mr Bennett labelled Yesh Atid a “dictatorship” since it does not hold primaries to select its Knesset members. Last month, Finance Minister Yair Lapid, leader of Yesh Atid, said that continuing the talks with the Palestinians was crucial “even if progress in the negotiations will necessitate changes to the coalition”.

If and when the 12 Habayit Hayehudi MKs leave the coalition the government would lose its majority and the only options for its survival would be to bring in either Labour or Shas.

The religious party, Shas, would probably be happy to leave the opposition but would demand an end to the law being pushed by Yesh Atid mandating the draft of yeshivah students.

Labour would make an easier fit, and its new leader, Yitzhak Herzog, will probably be amenable to saving the government if a peace deal was on the cards.

While the prime minister will not regret seeing the back of Mr Bennett, his main obstacle going forward in the talks, if he indeed intends to do so, is the majority of Likud MKs who are every bit as right-wing as Habayit Hayehudi.

There is no way that Mr Netanyahu could agree to an Israeli retreat from the West Bank without a full-scale insurrection in his party. Would he risk it? Only if his partner, Foreign Minister Avigdor Lieberman, is behind him and if he is certain that he could win another election in a new political formation. Such a scenario seems far-fetched — but is being widely discussed in the Knesset.