Netanyahu's coalition launched a campaign to overhaul Israel's judiciary, sparking unprecedented protests, sending the shekel down and stirring concern among allies for Israel's democratic health.

Netanyahu's coalition says the judicial changes are needed to push back against what it describes as overreach by a Supreme Court that it says has become too politically interventionist.

Critics say the changes could encourage corruption and abuses of power by removing effective oversight on the executive's authority.

With long-serving Prime Minister Benjamin Netanyahu facing his gravest domestic crisis, Israel's military took its first known internal disciplinary action over the protests.

Critics worry that the reforms aim to curb judicial independence.

Police used a water cannon to disperse demonstrators opposed to the judicial campaign by Netanyahu's nationalist-religious coalition that has plunged Israel into one of its worst crises in decades.

Netanyahu's televised remarks to his cabinet were spare on detail and come after opposition leaders suspended negotiations pending the formation of a key panel for selecting judges.

The warning from the head of state who is supposed to stand above politics and whose function is largely ceremonial, underlined the alarm the divisions opened up by the proposals has caused.