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Prime Minister Benjamin Netanyahu on Wednesday issued an ultimatum to ministers, warning them either to vote in favor of his proposal to reform the Israel Lands Administration or quit.

The legislation, which would have put swathes of state-owned land up for sale, met opposition from lawmakers in two parties allied to Netanyahu, as well as some within his own rightist Likud. Many of those demurring sat out the ratification session.

Netanyahu's warning to ministers came after the Knesset rejected the proposal in its second and third readings. Bereft of a majority in the 120-seat Knesset, Netanyahu withdrew the bill. His office said he then issued a statement threatening to fire cabinet ministers and deputy ministers from factions that did not support the measure in a rescheduled vote.

A subcommittee of the Knesset Economic Affairs Committee voted earlier this week to radically amend the original version of the reform.

The amendments mean that the rate of sales of state-owned land will not increase in coming years, and that the real estate market is likely to remain largely unchanged.

The original version of the proposed reform, which placed no limitation on the amount of land that could be sold to leasers, generated broad opposition among many parties and social advocacy organizations. Under the version finally approved, only 800,000 dunams are to be privatized.

The Opposition praised the Knesset vote, which failed as a result of some coalition members' absence from the plenum.

"Netanyahu lost and Israel won," said MK Dov Khenin, of the Jewish-Arab Hadash party. He called the proposed reforms "dramatic privatization" and termed rejection of it "a giant achievement for the people's struggle/"

MK Sheli Yachimovich, who has been outspoken in her own opposition to the reform, said following the vote: "Sometimes dreams do come true."

Yachimovich has called the proposal "the largest and most wanton privatization of land in the history of the state."

"It will transfer huge amounts of state-owned land into the hands of magnates and wreak enormous damage on the public," Yachimovich said earlier this week.

"The 'mere' 4% of state-owned land that Netanyahu's cohorts so arrogantly present as a 'moderation' of the reform, mean 800,000 dunams of the most lucrative land in central Israel will be transformed into a commodity handed over to the highest bidder, and will result in young people paying a higher price for apartments, precluding any environmental planning that takes the public's needs into account," she added.

A former finance minister, Netanyahu won plaudits for his free-market reforms and argues that sweeping privatization is crucial for keeping Israel above the global budget crisis. The ILA owns 93 percent of land in Israel.

Netanyahu's economic views are not shared by more social welfare-minded lawmakers in the center-left Labor party, a Likud ally. Members of the religious-nationalist Jewish Home party, another coalition partner opposed to the bill, said national turf should remain Israel's public trust.

It was not immediately clear when the bill could be voted on again, as the Knesset disbands for its summer recess next week.