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Israel's outgoing Prime Minister Binyamin Netanyahu has appointed a key ally as justice minister in what many believe is a bid to seek immunity from prosecution.

Netanyahu, who last week became Israel's first prime minister to fail to form a coalition government, faces a long-standing corruption probe that could lead to his prosecution.

His newly appointed Justice Minister Amir Ohana is a staunch ally of Netanyahu and has voiced support for a bill to grant a seated prime minister immunity from prosecution.

Ohana is infamous for his what is described as "blind loyalty" to Netanyahu and is committed to amending the Immunity Law or to pass an administrative override clause that may help the country's premier to avoid prosecution for corruption.

Ohana, who is now Israel's first openly gay justice minister, takes up the position from Netanyahu's hard-right rival Ayelet Shaked, fired by the premier on Sunday along with education minister Naftali Bennett.

Shaked and Bennett had left the Likud years earlier, but their New Right party failed to win enough votes in April's poll to clear the threshold to join Israel's parliament.

Netanyahu is facing possible indictment for bribery, fraud and breach of trust in the months ahead, despite efforts to delay his trials.

He has also reportedly asked the attorney general for a second deferral of his hearing because of the snap elections called for September.