Photo: The Canadian Press

Israeli police on Tuesday recommended that Benjamin Netanyahu be indicted on bribery and breach of trust charges in two corruption cases, dealing an embarrassing blow to the embattled prime minister that is likely to fuel calls for him to resign.

Netanyahu angrily rejected the accusations, which included accepting nearly $300,000 in gifts from two billionaires. He accused police of being on a witch hunt and vowed to remain in office and even seek re-election.

"I will continue to lead the state of Israel responsibly and loyally as long as you, the citizens of Israel, choose me to lead you," an ashen-faced Netanyahu said in a televised address. "I am sure that the truth will come to light. And I am sure that also in the next election that will take place on time I will win your trust again, with God's help."

The recommendations marked a dramatic ending to a more than yearlong investigation into allegations that Netanyahu accepted gifts from Hollywood mogul Arnon Milchan and Australian billionaire James Packer, and suspicions that he offered to give preferential treatment to a newspaper publisher in exchange for favourable coverage.

The recommendations now go to Attorney General Avihai Mendelblit, who will review the material before deciding whether to file charges. Netanyahu can remain in office during that process, which is expected to drag on for months.

But with a cloud hanging over his head, he could soon find himself facing calls to step aside. During similar circumstances a decade ago, Netanyahu, as opposition leader, urged then-Prime Minister Ehud Olmert to resign during a police investigation, saying a leader "sunk up to his neck in interrogations" could not govern properly.

In the immediate aftermath of the police announcement, reactions quickly fell along partisan lines.

Former Prime Minister Ehud Barak, a bitter rival of Netanyahu, called on him to suspend himself and for the coalition to appoint a replacement on Wednesday morning.

"The depth of corruption is horrifying," Barak said. "This does not look like nothing. This looks like bribery."

But key members of Netanyahu's Likud Party rallied behind him. Cabinet Minister Miri Regev said she was "not excited" by the police recommendations and urged patience while the attorney general reviews the case.

She said the biggest surprise was that Yair Lapid, leader of the opposition Yesh Atid party, had been a witness. David Amsalem, another Netanyahu confidant, called Lapid a "snitch."

Lapid later issued a statement calling on Netanyahu to resign.

"Someone with such serious accusations against them, many of which he does not even deny, cannot continue to serve as prime minister with responsibility for the security and well-being of Israel's citizens," Lapid said.

In a statement, police said their investigation found sufficient evidence to indict Netanyahu in the first case, known as File 1000, for accepting bribes, fraud and breach of trust.

It said Netanyahu had accepted gifts valued at 750,000 shekels ($214,000) from Milchan, and 250,000 shekels ($71,000) from Packer. The gifts from Milchan reportedly included expensive cigars and champagne.