The bill will come to a floor vote next week, when it is likely to share a voting session that includes a series of other highly controversial bills, including the so-called Mofaz, Slomiansky and Gafni bills - the last of which calls for full funding for haredi schools, but not for other non-state ones.
But it is now likely that the first two will be stalled.
And with Labor lawmakers already likely to oppose the Mofaz bill, should the Slomiansky bill not pass, or fail to be brought for a vote, Habayit Hayehudi's threat to oppose the Mofaz bill could tip the balance in favor of the opposition on that key bill as well.
The Mofaz bill would allow any group of "rebel" MKs totaling at least seven to form its own faction or join another Knesset faction.
Even within the Likud, there is opposition to the Mofaz bill. Government Services Minister Michael Eitan said in a television interview that the bill detracts from the democratic process and violates the rules prohibiting laws tailored to specific cases.
"The number seven was computed specifically to target Kadima
," argued Eitan.
But it is not even certain that the ILA reform will be presented next week. There is a chance that, according to an obscure Knesset bylaw, the vote can only be held on it the following week. But this would require the signatures of at least 40 MKs to call a special session of the Knesset, since the summer recess begins next Friday.
Netanyahu and his advisers traded threats with leaders of coalition parties on Thursday, warning Habayit Hayehudi MKs that if they failed to support the reform bill, Likud would pull its support for the Slomiansky bill.
Habayit Hayehudi threatened in response that if Likud imposed the sanction on their party, their three-man faction would vote against the Mofaz bill.
Labor Party officials met again with Likud officials in an effort to reach an agreement regarding Labor's last-minute opposition to the reform bill. Overnight Wednesday, the prime minister was said to have been promised by Labor chairman Ehud Barak
that his party's ministers and deputy ministers would back the bill next week.
"Labor is cheating on its values, spitting in the face of its historic leaders and is conducting a final burial for its Zionist values," said Kadima spokesman Shmulik Dahan. "Labor lost its identity and turned into a floor rag used to fill in political holes in every coalition and on every topic. The fear of losing their seats in the government is bigger than their fear of losing their self-respect and loyalty to their values.
"If Labor MKs listen to Barak and allow the government to take away the Jewish nation's lands, they will prove above any doubt that it is easier to trash the homeland than to unstick Labor ministers from their seats," said Dahan.
Meanwhile, a handful of Likud MKs and ministers worked behind the scenes to try to secure ways to evade participating in the vote, with opposition leaders telling The Jerusalem Post that even on Thursday, some government officials were negotiating with opposition legislators to offset their absence.
Coalition chairman MK Ze'ev Elkin, who absorbed much of the blame for Wednesday's debacle, backed Netanyahu's threat to fire any minister or deputy minister who did not vote for the reform next week.
"In the parliamentary field, what is expected of government ministers is to bear collective responsibility," Elkin told Army Radio. "When there is a government decision, you have to vote in favor of it. The fact that many ministers and deputy ministers were absent from the vote is problematic, and so I believe that the threat was certainly justified."
Elkin stressed that the bill would not be the subject of any amendments despite the demands of some coalition partners, even after Labor Party representatives and even opposition MKs said that a few changes - such as eliminating the word "sale" - would make the reform acceptable.