Prime Minister Binyamin Netanyahu, Naftali Bennett and Yair Lapid on Monday restarted coalition talks after a short break, Israel Radio reported.
The talks will focus on the controversy surrounding the size of the future government, and the fate of the Education portfolio.
MK Uri Ariel (Bayit Yehudi) said to Israel Radio that there will be a new coalition "by the end of the week."
Labor party leader Shelly Yacimovich, meanwhile, declared that she would reconsider enter the government in the event of significant diplomatic progress.
At a faction meeting, Yacimovich said that if there is significant progress during Obama's visit, Labor will move away from the "deadlock" and move towards an agreement to join the government.
"We are leaving to lead the opposition with our heads held high and proud, because we have stood by our convictions," Yacimovich stated.