“Netanyahu, this country is not your own,” he said. “This country is not my own. This country belongs to its citizens. Liberate this country from your chokehold and come in to negotiate directly, now.”

If that final stage, which Israel is entering for the first time in its history, also fails to produce a government, Parliament would be dissolved and Israel would start preparing for its next election, most likely in the spring.

Both Mr. Netanyahu, Israel’s longest-serving prime minister and leader of the conservative Likud, and Mr. Gantz, a centrist and relative political newcomer, have said they wanted to join forces in a broad government of national unity based on their two large parties.

But they have failed to agree on a power-sharing arrangement.

The negotiations have been complicated by, among other things, Mr. Netanyahu’s legal situation. He is facing possible indictment in three graft cases involving allegations of bribery, fraud and breach of trust.

Mr. Gantz has said he would join a unity government with Likud, but that he would not serve under a prime minister facing indictment. Likud has insisted that Mr. Netanyahu is its leader and has refused to entertain the idea of a governing coalition without him at the helm.

Recent talks have focused on a deal in which the two men would rotate the premiership, but they could not agree on the terms.

Mr. Gantz’s only other option for forming a government was doomed earlier Wednesday.

There had been speculation that he could form a narrow, minority government without Mr. Netanyahu and his right-wing and ultra-Orthodox allies. Such a coalition would have required the support of Arab parties and Avigdor Liberman’s ultranationalist Yisrael Beiteinu party.