The Israeli government has failed to pass a bill that would renew and uphold the legal status of illegal Israeli settlers in the occupied West Bank, marking a significant setback for the fragile coalition that could hasten its demise.

The failure to renew the bill on Monday highlighted the separate legal systems in the occupied West Bank, where nearly 500,000 Israeli settlers enjoy the benefits of Israeli citizenship and law while some 3 million Palestinians live under military rule that is now well into its sixth decade.

Three leading human rights groups have said the situation in the occupied territory amount to apartheid for Palestinians.

Prime Minister Naftali Bennett’s coalition remains in power, but the vote underscored the weaknesses and divisions in the fragile alliance and raises questions about how long it can survive.

Monday’s vote – defeated by a 58-52 margin – went far beyond the contours of the legal debate.

Instead, it served as a key test of the government’s prospects for survival, creating a paradoxical situation where some of the illegal settlements’ biggest opponents in the government voted for the bill, while hardline parties that support the settlements voted against the bill in order to weaken the government.

Bennett’s government came together last year after two years of political mayhem, with four elections producing no clear winner.

The coalition, made up of eight ideologically distinct parties that include both supporters and opponents of the settlements, pledged to sidestep divisive issues that could threaten its survival.

Monday’s vote showed just how difficult that mission has been.

The vote did not immediately topple the government, and it is still possible for the coalition to present a modified version of the legislation. But the setback indicated the government’s days could be numbered.

“As always after we lose, we will return stronger and win in the next round,” Israeli Foreign Minister Yair Lapid, the chief architect of the governing alliance, wrote in a statement on Twitter.

Some 500,000 Israeli settlers live in more than 120 settlements and outposts across the occupied West Bank that are considered illegal under international law.

The settlements, which are fortified, Jewish-only housing complexes, are continuing to expand in the occupied West Bank as well as occupied East Jerusalem. They are seen as a major obstacle to any potential deal with Israel.

Attacks by Israeli settlers against Palestinians and their property are common. Settlers are usually backed by armed Israeli forces when committing such attacks.