The crisis over military service within Prime Minister Benjamin Netanyahu's right-wing coalition follows speculation over whether Netanyahu wants early polls to bolster his political standing ahead of his possible indictment for bribery in the coming months.
Lieberman vowed on Tuesday that his Yisrael Beitenu party would "vote as one against the bill" as it stands now.
Finance Minister Moshe Kahlon said he would resign if the budget did not pass in the Knesset's winter session, which ends on Sunday.
Netanyahu, who attended MIT (the Massachusetts Institute of Technology) as an impressionable college student, said one thing that makes the United States truly unique in all the world is that no matter who you are, or where you're from, you can succeed if you're talented and work hard.
Liberman then has four weeks following the Passover break to submit a state bill regarding the military draft for hareidi-religious recruits, which is to be approved by the Committee and then passed in its first reading by the Knesset plenum, after which another piece of legislation - proposed by a Shas lawmaker - will be tacked on to it.
Another coalition source, who said they had personally discussed the agreement with the prime minister earlier Tuesday, said that Netanyahu "was making it look like his victory" but that "the opposite was true".
"Many countries in the Middle East are saying that they are also allowed to enrich uranium if Iran is allowed to do so; therefore, the way to prevent this danger, the nuclearization of the Middle East, is to either thoroughly correct the agreement or abrogate it", he said.
The need for a new bill arose after the Supreme Court in September struck down a law allowing ultra-Orthodox men to be exempted from military service up until 2023.
Ultra-Orthodox parties that help underpin Netanyahu's government had demanded a vote on the conscription legislation before passing the budget.
"If the law is passed in its current form - we're out", Yisrael Beytenu MK Oded Forer told Channel 10 on Monday.
Israel's parliament was expected to take up key measures later in the day in what could signal whether Netanyahu's right-wing coalition will survive for now or head towards elections that could be held as early as June. "We don't want elections and we don't want the government to break up, but not at any price". The final word on whether to indict him rests with the attorney-general, a decision that could be months away.
The other alleges he sought a secret deal with the publisher of a top-selling newspaper for favourable coverage.
The Arab Gulf states consider Israel an ally against the Iranian threat, Israeli Prime Minister Benjamin Netanyahu told Fox News last night.