Israel's Defence Minister Moshe Yaalon has announced his resignation, due to a lack of "trust" in Prime Minister Benjamin Netanyahu.
The move comes after Netanyahu apparently proposed replacing him as part of a move to expand the coalition government.
Political sources say the PM offered ultra-nationalist politician Avigdor Lieberman the defence portfolio instead.
Lieberman, 57, is one of the country's most polarising politicians. Over three decades, he has at times been Netanyahu's closest ally and other times a fierce rival.
"I informed the PM that after his conduct and recent developments, and given the lack of faith in him, I am resigning from the government and parliament and taking a break from political life," Defence Minister Moshe Yaalon said on Twitter.
Mr Yaalon's exit could put a new dent in domestic and Western confidence in the Netanyahu government.
A former chief of Israel's armed forces, Yaalon had shored up relations with the Pentagon that provided a counter-weight to Netanyahu's policy feuds with U.S. President Barack Obama over peace talks with the Palestinians and Iran's nuclear programme.
By contrast, Lieberman - whose appointment has not been confirmed - is inexperienced militarily and known for his past hawkish talk against Palestinians, Israel's Arab minority and Egypt - a key regional security partner for Israel.
Netanyahu's office did not immediately respond to Yaalon's resignation announcement.
The prime minister's offer of Yaalon's cabinet post to Lieberman emerged this week after talks on bringing centre-left opposition leader Isaac Herzog into the government failed.
The inclusion of Lieberman's Yisrael Beitenu party in the coalition, which has also yet to be confirmed, would give Netanyahu's Likud party control over 67 of parliament's 120 seats, up from the current razor-thin majority of 61.
Yaalon is also a Likud politician who shares Netanyahu's dim views on the prospects for a long-term accord with the Palestinians. But they clashed this month over the trial of a soldier who shot dead a wounded and supine Palestinian assailant, with Yaalon coming out against public calls for clemency while Netanyahu took a more circumspect position.
A poll aired by Israel's Channel 10 television on Thursday found that 51 percent of Israeli Jews saw Yaalon as best suited for defence minister. Twenty-seven percent preferred Lieberman.
U.S. officials have declined comment on the prospect of dealing with Lieberman as Israeli defence minister, but one Egyptian diplomat told Reuters on Thursday that Cairo was "shocked" at the idea.
Additional reporting by Reuters and other agencies
