With less than 12 hours left, talks with the far-right Jewish Home -- the only potential coalition partner yet to agree to join a Netanyahu government -- took on heightened urgency.
If Netanyahu manages to sign the party, as expected, it will give him a razor-thin majority of 61 within the 120-seat Knesset, or parliament.
If he fails, President Reuven Rivlin will ask another party leader to form a government -- most likely Isaac Herzog, head of the centre-left Zionist Union, which won 24 seats in the March election.
Without his support, Netanyahu, who began his second term as premier in 2009, will fail and the rightwing religious government he had been hoping to form will never see the light of day.
Although the deadline is midnight (2100 GMT), Netanyahu does not need to present his final lineup but merely inform the president that he has sufficient support to form a government.
The main sticking point has been the justice ministry portfolio which Bennett was demanding but Netanyahu wanted to keep for his rightwing Likud party.
Bennett had upped his demands on Monday after Foreign Minister Avigdor Lieberman dropped a bombshell by pulling out of the coalition talks, saying his anti-Arab Yisrael Beitenu faction would not join a Netanyahu government.
The move piled pressure on Netanyahu who quickly signed an agreement with the ultra-Orthodox Shas party, leaving only Bennett's party as the last piece in the puzzle.
Despite the bad blood between Netanyahu and Bennett, commentators said the two would eventually reach a last-minute deal.