The United Torah Judaism and Likud parties failed to reach a coalition agreement Monday night because of the issue of authority over conversions.
The talks between UTJ and the Likud hit a snag over the issue of conversions to Judaism. UTJ refuses to recognize a mechanism for conversion involving special conversion courts placed under the oversight of the Chief Rabbinate. The issue became a serious matter of contention between the High Rabbinical Court and Rabbi Haim Druckman when a judge declared thousands of conversions performed under the auspices of the conversion courts, headed by Rabbi Druckman, to be invalid.
Ironically, the Yisrael Beiteinu party, which has pressed for less religious content in state laws, has become the champion of the rabbinical conversion courts. Party head Avigdor Lieberman has pressed for unshakable formal state recognition of the conversions performed by those courts, which are generally perceived as having been developed by the national-religious sector.
The coalition agreement between Likud and Yisrael Beiteinu includes a clause for a new state-sanctioned 
Ironically, the Yisrael Beiteinu party... has become the champion of the rabbinical conversion courts.
conversion mechanism, whereby municipal chief rabbis, alongside two rabbinical judges from the Chief Rabbinate, would be authorized to perform conversions through the special conversion courts.
UTJ rabbis, however, said the Yisrael Beiteinu conversion clause was unacceptable.
At the end of negotiations which had appeared stalled earlier in the day, the United Torah Judaism (UTJ) and Likud parties reached a provisional coalition agreement Monday evening. However, the deal was contingent on the approval of the party's rabbinical advisors. In the wake of the UTJ-Likud provisional agreement, UTJ Chairman Yaakov Litzman met Monday night with MK Lieberman to discuss the conversion issue, but with no progress towards compromise made. As a result, the Likud-UTJ deal fell through.
Another Haredi-religious party, Shas, has already signed a coalition agreement with the Likud.