OCCUPIED JERUSALEM: Prime Minister Benjamin Netanyahu's largest coalition partner issued a veiled threat Wednesday to quit the government over a dispute about a bid to amend Israel's compulsory draft policy opposed by the powerful ultra-Orthodox community.

The controversy over a highly emotive issue in a country where most 18-year-olds face conscription has flared ahead of the August 1 expiration of a disputed law that grants blanket exemptions to strictly religious Jews and Arab citizens.

Vice Prime Minister Shaul Mofaz, an ex-general whose centrist Kadima group joined the government in May, demanded that Netanyahu adopt conscription reform backed by his party or he would weigh his future membership in the coalition.

"This is a condition for examining the possibility of carrying out our partnership in the government," Mofaz said in remarks broadcast live by Israeli radio stations.

Mofaz spoke after Kadima lawmaker Yochanan Plessner released reform proposals drawn up by a committee of experts and parliamentarians. Netanyahu disbanded the panel Monday after religious leaders protested against the anticipated findings.

"The ball is in the prime minister's court, and we are speaking of a matter of days," Mofaz added.

Plessner's report seeks to slash military service exemptions to religious seminary students from a present 50,000 to 1,500, by 2016. It recommends backing up the policy by levying stiff financial penalties against any draft evaders.

It also seeks to triple the number of Arabs doing national or military service from a current 2,400, within five years. Israeli Arabs are dead against the proposal.

It challenges across-the-board exemptions given the ultra-Orthodox and Arab communities since Israel's founding in 1948, citing a need to improve national solidarity and to widen a pool of military recruits to offset a decline in immigration.

Netanyahu's government was not seen as under immediate threat of dissolution, though the dispute with Mofaz pointed up challenges to his authority, distracting from an otherwise national focus on a campaign to stop Iran's nuclear programme.

Some Israeli pundits predicted a compromise and saw the crisis more as a mirror of how Mofaz was under pressure to show the fruits of his two-month-old partnership with Netanyahu.

The centrist leader staked his prestige on pledges to reform the draft, and to reviving stalled diplomacy with the Palestinians, another effort that has shown few results so far.

Netanyahu has cautiously supported draft reform, but hopes to achieve a consensus as the August deadline looms to come up with a new policy to replace the 2002 "Tal Law" on military service that Israel's High Court has ruled unconstitutional.

Netanyahu is under attack from other partners, including ultra-Orthodox parties who have threatened to quit if he pursues reforms that would make their followers do military service.

"This plan is simply impossible to implement," Housing Minister Ariel Attias of the religious Shas party told Israel Radio, taking issue in particular with suggestions that seminary students should be fined for rejecting conscription.

Kadima is Israel's largest political party and the biggest in Netanyahu's government, with 28 lawmakers in the 120-member parliament. Netanyahu's own Likud party has 27 seats, and 16 are held by religious parties opposed to conscription reform.