Left-wing Meretz and the new party of former Israeli prime minister Ehud Barak said Thursday they had formed an alliance to boost the bloc ahead of September's general election.
Such a union could be the catalyst for further mergers among the smaller parties splintering both the left-wing and right-wing votes.
Meretz barely passed the threshold in snap polls held in April, which saw Netanyahu and his right-wing and religious allies win a majority.
And opinion surveys have predicted Barak's new party formed in late June would not make it into parliament come September.
"The democratic union we founded expresses the desire of a large group in the country in the face of corruption, racism, coercion, occupation and (social) gaps," newly-elected Meretz head Nitzan Horowitz, who leads the list, said at the alliance's launch in Tel Aviv.
The union was facilitated by Stav Shaffir who quit Labour, placed second on the list, and comes after Labour's head Amir Peretz ruled out joining forces with Meretz.
Barak said the merger was "the first step in bringing Israel back on track and ensuring its future as a Jewish, democratic and Zionist state".
Netanyahu over the weekend surpassed founding father David Ben-Gurion as Israel's longest-serving prime minister, first at the helm between 1996-1999 and then again since 2009.
His apparent victory in the April polls turned sour after he failed to form a coalition government and opted instead for new elections on September 17, while under the threat of possible indictment on bribery, fraud and breach of trust charges.