Israeli Foreign Minister Avigdor Lieberman has announced that he is to end his partnership with Israeli Prime Minister Benjamin Netanyahu and dismantle the Likud-Beiteinu faction.

Lieberman revealed the break from Netanyahu in a press conference where he said that the prime minister's response to unrest among Arab Israelis, rocket fire from Hamas in the Gaza Strip and the murder of three Israeli teenagers was not handled in the correct manner.

"Disagreements between the prime minister and me are fundamental and do not allow for a future partnership," Lieberman said.

"The partnership did not work during the elections, it did not work after the elections and to this day there were quite a few technical issues. When technical issues turn to fundamental ones there is no point in continuing."

Israel's top diplomat said that, despite their bitter disputes, the end of his partnership with Netanyahu did not spell the end of the coalition as his Beiteinu party would remain in the government with its ministers continuing in their roles.

"Our voice is different than that of the Likud and we have to make it heard," Lieberman continued.

Lieberman is a hardliner and a hawk on defence issues who has accused Netanyahu of being soft in his response to Hamas rocket attacks and has called for a ground offensive in the Gaza Strip.

Netanyahu vowed last week that "Hamas will pay" for the kidnap and murder of teenagers Eyal Yifrach, Gilad Shaar, and Naftali Frankel. Hamas has denied all responsibility for their deaths.

The Likud-Beiteinu coalition held 31 seats in the Israeli Knesset but the split now leaves Likud with 20 seats, one more than the centrist Yesh Atid party, and Lieberman's Beiteinu party with 11.