Jerusalem ( CNN ) -- A day after thousands of Israeli demonstrators demanded an end to rules that make ultra-Orthodox Jews exempt from the draft , Prime Minister Benjamin Netanyahu said Sunday that the nation 's approach to military service must change . `` The existing situation can not continue . Neither the army , the economy nor society can continue on the current path , '' Netanyahu said at the start of his weekly Cabinet meeting . The prime minister named a new team to draw up a law that would `` share the burden '' of military service , which is required for most Israelis when they reach the age of 18 . The existing law provides an exemption for Arabs and ultra-Orthodox Jews . The issue has been a controversial political topic for months for Netanyahu , but time is running out . Israel 's Supreme Court has ruled that the law , which exempts tens of thousands of Israelis from service , must be replaced by August 1 . Such a move is sorely needed , according to thousands of protesters who marched on the streets of Tel Aviv Saturday night . Holding banners reading , `` Service for all '' and `` We are not suckers , '' they demanded a universal military draft . More than 20,000 people turned out to protest , Israeli Police spokesman Micky Rosenfeld said . Netanyahu acknowledged the demonstration Sunday . `` I completely understand the demand of those who serve and their families , '' he said . Ultra-Orthodox students have been exempt from service through historical political agreements since Israel 's establishment in 1948 . Community leaders have said ultra-Orthodox men should spend their time studying the Torah at religious institutes rather than defending their country in uniforms . Both ultra-Orthodox Jews and Arab Israeli citizens are exempt from military service . They can choose to volunteer or participate in civil service programs within their communities , but the vast majority of both groups do not participate in those programs . The issue is a sensitive one for Netanyahu and his Likud paty , which has traditionally relied on ultra-Orthodox parties as natural coalition partners . But his government has showed some signs of shifting toward the center . In April , Netanyahu beefed up his political dominance when he formed a coalition government with the centrist Kadima faction , bringing the number of his coalition partners to 92 in the 120-seat Knesset . On Sunday , the Likud party approved most of the recommendations of a government committee , which had suggested changing the draft law to include ultra-Orthodox Jews . But the party said in a statement that the principle of service for all should apply to Israel 's Arab population as well . Should the Likud go ahead with its reform efforts and force thousands of Yeshiva students to join the Israeli Defense Forces , it could risk losing some of its longstanding partners . A lawmaker from one ultra-Orthodox party criticized Netanyahu Sunday for pushing the changes , and warned that the prime minister 's political alliances could be at risk . `` To my regret , Netanyahu does not understand that the demonstrators look to cut off the partnerships between us , '' Moshe Gafni of the Yahadut Hatorah party told Israel 's army radio . `` If this will be the case , Netanyahu will lose his power . '' But the prime minister told his Cabinet Sunday that keeping the current system was not an option . The previous government committee created to tackle the thorny issue dissolved due to disagreements within its members . A new government team will draft the details of a proposed law that will be more equitable , Netanyahu said . Knesset lawmakers will have the final say . `` We are facing a historic move , a dramatic increase in the participation of the ultra-Orthodox and Arab publics in bearing the burden '' Netanyahu said . `` Such an increase has started , it is welcome , it is important -- but it is not enough . We want to bring about a dramatic increase in the rate of participation . '' That means those who do n't comply with the country 's draft law should be punished , Zohara Berger-Tzur of the Israeli Forum for Equal Service told CNN . `` We demand service for all at the age of 18 and personal sanctions against those who evade duty , '' she said . `` The new draft must comply with these demands . '' Gaza truce gets off to a shaky start . Evacuation of 150 West Bank settlers begins . Militant Palestinian group behind Israel attack , Egypt official says .
` ` The existing situation can not continue , '' Prime Minister Benjamin Cohen says . More than 100 demonstrators demand reforms to military draft rules . The controversial law is a thorny political issue for Netanyahu 's government . A government committee will draw up a proposed new law , he says .