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Israelis opposed to Prime Minister Benjamin Netanyahu's judicial overhaul plan set up bonfires and block a highway during a protest moments after the Israeli leader fired his defence minister, in Tel Aviv on March 26.Ohad Zwigenberg

Tens of thousands of Israelis poured into the streets of cities across the country on Sunday night in a spontaneous outburst of anger after Prime Minister Benjamin Netanyahu abruptly fired his defence minister for challenging the Israeli leader’s judicial overhaul plan.

Protesters in Tel Aviv blocked a main highway and lit large bonfires, while police scuffled with protesters who gathered outside Mr. Netanyahu’s private home in Jerusalem.

The unrest deepened a months-long crisis over Mr. Netanyahu’s plan to overhaul the judiciary, which has sparked mass protests, alarmed business leaders and former security chiefs and drawn concern from the United States and other close allies.

Mr. Netanyahu’s dismissal of Defence Minister Yoav Gallant signalled that the Prime Minister and his allies will barrel ahead this week with the overhaul plan. Mr. Gallant had been the first senior member of the ruling Likud Party to speak out against it, saying the deep divisions were threatening to weaken the military.

But as droves of protesters flooded the streets late into the night, Likud ministers began indicating willingness to hit the brakes. Culture Minister Miki Zohar, a Netanyahu confidant, said the party would support him if he decided to pause the judicial overhaul.

In a brief statement, Mr. Netanyahu’s office said late Sunday the Prime Minister had dismissed Mr. Gallant. Mr. Netanyahu later tweeted “we must all stand strong against refusal.”

Inon Aizik, 27, said he came to demonstrate outside Mr. Netanyahu’s private residence in central Jerusalem because “bad things are happening in this country,” referring to the judicial overhaul as “a quick legislative blitz.”

Mr. Netanyahu’s decision came less than a day after Mr. Gallant, a former senior general, called for a pause in the controversial legislation until after next month’s Independence Day holidays, citing the turmoil in the ranks of the military.

Mr. Gallant had voiced concerns that the divisions in society were hurting morale in the military and emboldening Israel’s enemies. “I see how the source of our strength is being eroded,” Mr. Gallant said.

While several other Likud members had indicated they might follow Mr. Gallant, the party quickly closed ranks on Sunday, clearing the way for his dismissal.

Galit Distal Atbaryan, Netanyahu’s public diplomacy minister, said that Mr. Netanyahu summoned Mr. Gallant to his office and told him “that he doesn’t have any faith in him any more and therefore he is fired.”

Mr. Gallant tweeted shortly after the announcement that “the security of the state of Israel always was and will always remain my life mission.”

Opposition leader Yair Lapid said that Mr. Gallant’s dismissal “harms national security and ignores warnings of all defence officials.”

Israel’s consul general in New York City, Asaf Zamir, resigned in protest.

Avi Dichter, a former chief of the Shin Bet security agency, is expected to replace him. Mr. Dichter had reportedly flirted with joining Mr. Gallant but instead announced Sunday he was backing the Prime Minister.

Mr. Netanyahu’s government is pushing ahead for a parliamentary vote this week on a centrepiece of the overhaul – a law that would give the governing coalition the final say over all judicial appointments. It also seeks to pass laws that would grant parliament the authority to override Supreme Court decisions with a basic majority and limit judicial review of laws.

Mr. Netanyahu and his allies say the plan will restore a balance between the judicial and executive branches and rein in what they see as an interventionist court with liberal sympathies.

But critics say the constellation of laws will remove the checks and balances in Israel’s democratic system and concentrate power in the hands of the governing coalition. They also say that Mr. Netanyahu, who is on trial for corruption charges, has a conflict of interest.

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Protesters clash with the police during a rally against the Israeli government's judicial overhaul in Tel Aviv on March 27.AHMAD GHARABLI/AFP/Getty Images

Tens of thousands of people have taken to the streets over the past three months to demonstrate against the plan in the largest demonstrations in the country’s 75-year history. The State Department dismissed as “completely false” claims repeated by Yair Netanyahu, the Prime Minister’s son, that the U.S. government was financing these protests.

Leaders of Israel’s vibrant high-tech industry have said the changes will scare away investors, former top security officials have spoken out against the plan and key allies, including the United States and Germany, have voiced concerns.

In recent weeks discontent has even surged from within Israel’s army – the most popular and respected institution among Israel’s Jewish majority. A growing number of Israeli reservists, including fighter pilots, have threatened to withdraw from voluntary duty in the past weeks.

Israel’s military is facing a surge in fighting in the occupied West Bank, threats from Lebanon’s Hezbollah militant group and concerns that arch-enemy Iran is close to developing a nuclear-weapons capability.

Violence both in Israel and the occupied West Bank has escalated over the past few weeks to heights unseen in years.

Manuel Trajtenberg, head of an influential Israeli think tank, the Institute for National Security Studies, said that “Netanyahu can dismiss his defence minister, he cannot dismiss the warnings he heard from Gallant.”

Meanwhile, an Israeli good governance group on Sunday asked the country’s Supreme Court to punish Mr. Netanyahu for allegedly violating a conflict of interest agreement meant to prevent him from dealing with the country’s judiciary while he is on trial for corruption.

The Movement for Quality Government in Israel, a fierce opponent of the overhaul, asked the court to force Mr. Netanyahu to obey the law and sanction him either with a fine or prison time for not doing so. It said he was not above the law.

“A prime minister who doesn’t obey the court and the provisions of the law is privileged and an anarchist,” said Eliad Shraga, the head of the group, echoing language used by Mr. Netanyahu and his allies against protesters opposed to the overhaul. “The Prime Minister will be forced to bow his head before the law and comply with the provisions of the law.”

The Prime Minister responded saying the appeal should be dismissed and said that the Supreme Court didn’t have grounds to intervene.

Mr. Netanyahu is barred by the country’s Attorney-General from directly dealing with his government’s plan to overhaul the judiciary, based on a conflict of interest agreement he is bound to, and which the Supreme Court acknowledged in a ruling over Mr. Netanyahu’s fitness to serve while on trial for corruption. Instead, Justice Minister Yariv Levin, a close confidant of Mr. Netanyahu, is spearheading the overhaul.

But on Thursday, after parliament passed a law making it harder to remove a sitting prime minister, Mr. Netanyahu said he was unshackled from the Attorney-General’s decision and vowed to wade into the crisis and “mend the rift” in the nation. That declaration prompted the Attorney-General, Gali Baharav-Miara, to warn that Mr. Netanyahu was breaking his conflict of interest agreement.

The fast-paced legal and political developments have catapulted Israel into uncharted territory and toward a burgeoning constitutional crisis, said Guy Lurie, a research fellow at the Israel Democracy Institute, a Jerusalem think tank.

“We are at the start of a constitutional crisis in the sense that there is a disagreement over the source of authority and legitimacy of different governing bodies,” he said.

Mr. Netanyahu is on trial for charges of fraud, breach of trust and accepting bribes in three separate affairs involving wealthy associates and powerful media moguls. He denies wrongdoing and dismisses critics who say he will try to seek an escape route from the charges through the legal overhaul.