Prime Minister Benjamin Netanyahu's coalition crisis eased on Monday when a coalition partner backed off a demand to be given the defence ministry, making an early election less likely.

Education Minister Naftali Bennett's U-turn surprised many pundits, who had predicted the leader of the far-right Jewish Home party would opt to quit in protest. He said the party was withdrawing all its political demands and would stand by the prime minister.

"You win some, you lose some," Bennett said in a televised address, shrugging off Netanyahu's rejection of his bid.

Netanyahu, head of the right-wing Likud party, has been making last-ditch efforts to prevent the collapse of the government, which has had a majority of just one seat in parliament since Avigdor Lieberman resigned as defence chief last week.