ISRAELI Prime Minister Benjamin Netanyahu vowed to carry on overnight after police recommended indicting him on corruption charges, angrily dismissing the allegations and the critics calling on him to step down.

With his coalition partners dutifully lining up behind him, the longtime leader readied himself for a prolonged battle over his political legitimacy as the Attorney-General considers whether to ultimately press charges.

The police announcement that Mr Netanyahu’s acceptance of nearly $US300,000 ($381,000) in gifts from two billionaires amounted to bribery sent shockwaves through the Israeli political system and delivered a humiliating blow to Mr Netanyahu after years of allegations and investigations.

But it did not appear to immediately threaten his lengthy rule as reaction largely fell along partisan lines.

Nearly all of Netanyahu’s Cabinet ministers issued statements of support and his coalition partners all signalled they would stick by him, for now.

“Let me reassure you: the coalition is stable. No one, not I and no one else, plans to go to elections. We will continue to work together with you for the people of Israel until the end of our term,” he said to a gathering of local government officials in Tel Aviv.

“After I read the recommendations report, I can say it is biased, extreme, full of holes like Swiss cheese and doesn’t hold water.”

In an impassioned defence, Mr Netanyahu took aim at police investigators saying their figures were vastly inflated and tried “to create a false impression of exchanges that never existed.” Though he is not legally compelled to resign, several opposition figures called on Mr Netanyahu to do so to avoid corrupting the office further.

Under similar circumstances a decade ago Mr Netanyahu, then the opposition leader, urged then-Prime Minister Ehud Olmert to resign after police recommended he be indicted, saying a leader “sunk up to his neck in interrogations” could not govern properly.

In contrast to Mr Olmert, who eventually stepped down and was convicted and imprisoned, Mr Netanyahu is still relatively popular with the public and enjoys broad political support in his Likud party and among coalition partners — nearly all of whom stand to lose power if elections were held today.

Public Security Minister Gilad Erdan, who oversees the police, said the prime minister “deserves the assumption of innocence,” while Mr Netanyahu’s coalition whip, David Amsalem, accused the police of committing “an illegitimate act here to attempt a coup d’etat in Israel”.

More importantly, the coalition parties that keep Mr Netanyahu afloat said they would await the ruling of Attorney-General Avihai Mandelblit, who could take months to decide whether to file charges.

The only crack in the wall-to-wall support came from Education Minister Naftali Bennett, head of the nationalistic Jewish Home party, who said Mr Netanyahu could keep serving but was “not living up to the standard” expected of his office.

Police recommended indicting Mr Netanyahu over accepting gifts from Hollywood mogul Arnon Milchan and Australian billionaire James Packer over suspicions that he offered to give preferential treatment to a newspaper publisher in exchange for favourable coverage.

Police say that in that in return for lavish gifts that included jewellery, expensive cigars and champagne, Mr Netanyahu had operated on Milchan’s behalf on US visa matters, tried to legislate a generous tax break for him and sought to promote his interests in the Israeli media market.

There is no suggestion of any wrongdoing on Mr Packer’s part.

“I admire Prime Minister Netanyahu and am happy that I was given the opportunity to be his friend,” Mr Packer said in his testimony, according to Channel 10.

“I was happy to give him presents, many times at his request and his wife Sara’s request.”

One of the biggest surprises to emerge was that Yair Lapid, leader of the centrist opposition Yesh Atid party, had given testimony about Mr Netanyahu’s alleged efforts to help Milchan that he witnessed during his term as finance minister.

Mr Netanyahu pounced on this as an indication that the investigation was politically motivated and said Mr Lapid looked to “topple me at any cost”. His Likud allies lashed out at Lapid, with Amsalem angrily calling him a “snitch”. “That’s how criminals talk, not public servants,” Mr Lapid responded, saying that as a law-abiding citizen he merely gave a short testimony upon the request of police.

“Don’t threaten us. We cannot be intimidated. We will not let you make this a country where honest people are scared of speaking the truth,” he said to Mr Netanyahu and his allies.

“You cannot represent us in the world, when every foreign leader knows that you stand accused of serious offences. For the good of the citizens of Israel, the prime minister needs to vacate his post.”

Other leading opposition figures and even former Netanyahu allies called on him to resign as well.

Mr Netanyahu has claimed to be a victim of an overaggressive police force and a media witch hunt that has also targeted his family.

In an emotional television appearance late on Tuesday, he vowed not only to serve out his term but run again for re-election. Mr Netanyahu has served as prime minister since 2009, and previously from 1996 to 1999.