Meeting in Jerusalem, the party said it would support the recommendations proposed by the Plesner committee last week.

"The party this morning discussed and unanimously adopted the principles laid out by the Plesner commission," Likud spokeswoman Noga Katz said in a statement.

The decision means the government will now move towards drafting a law requiring all sectors of Israeli society to complete either military or community service, with penalties to be levied on those who fail to comply.

The Plesner panel also called for increased incentives and benefits for those who serve, as well as efforts to combat draft-dodging.

The new law will replace the so-called Tal Law, which contained national service exemptions for ultra-0rthodox Jews and Arab Israelis, but was overturned by Israel's High Court earlier this year.

Likud's decision to back the recommendations of the commission appeared to head off the possibility of a coalition crisis.

The Kadima party headed by Shaul Mofaz, which joined the government in May giving Netanyahu a massive parliamentary majority, had threatened to quit the coalition over the issue of military service for all.

But after the Likud party decision, Netanyahu's office said the prime minister and Mofaz had agreed on the formation of a panel to draft the new law.

"Prime Minister Benjamin Netanyahu and vice prime minister Shaul Mofaz are in agreement on the formation of a commission charged with drawing up a law on the equality of service to be presented at the next government meeting," the statement said.

The issue has also resonated throughout Israeli society, with thousands of Israelis taking to the streets in Tel Aviv on Saturday night to call on the government to require all sectors of society to participate in national service.

It has proved thorny for Netanyahu, whose coalition includes parties like Kadima and the ultra-nationalist Yisrael Beitenu, which want service for all, but also ultra-Orthodox parties that strongly oppose extending compulsory service.

Military service is compulsory for most Israelis over the age of 18, with men serving three years and women two.