A politician known for his fierce loyalty to Israeli Prime Minister Benjamin Netanyahu resigned as coalition chairman Wednesday as police investigated allegations against him of corruption and mob ties.

"The current situation is making it difficult for me to operate," David Bitan wrote in a Facebook post, while stressing he would remain a member of parliament on behalf of Netanyahu's ruling Likud party.

Bitan has been grilled at length over separate allegations of bribery and links with organised crime during his time as deputy mayor of Rishon Lezion, near Tel Aviv.

Replacing Bitan as coalition chairman will be David Amsalem, another vocal Netanyahu supporter from Likud advancing a bill that would limit the police's ability to make recommendations to the attorney general on whether or not to charge suspects.

Bitan's resignation comes as the Israeli legal and political establishment awaits the conclusion of police investigations in suspected corruption by Netanyahu himself.

Speaking to supporters on Tuesday, the premier implied police would recommend to prosecutors he be indicted.

Fraud squad detectives questioned Netanyahu at his Jerusalem residence on Friday, for the seventh time in a nearly year-long corruption probe.

In one investigation, the prime minister is suspected of illegally receiving gifts from wealthy personalities including Australian billionaire James Packer and Hollywood producer Arnon Milchan.

In a second case, Netanyahu allegedly sought a secret pact for favourable coverage with the publisher of the top-selling Yediot Aharonot newspaper.

The purported scheme, not believed to have been finalised, would have seen him receive favourable coverage in return for helping curb Yediot's competitor, the pro-Netanyahu freesheet Israel Hayom.

Thousands of Israelis have protested in recent weeks to demand legal action against "corrupt" people in the government and their resignation.

Source: AFP