Even the sombre news of the death of Prime Minister Binyamin Netanyahu's highly influential father at the age of 102 could not quell the febrile atmosphere in the Israeli parliament, the Knesset, this week.

There was one topic of conversation among MKs, their aides and political journalists at crowded canteen tables: the sudden almost-certainty of a general election being brought forward from autumn 2013 to late summer this year.

"It's all anyone is talking about," said Avishay Braverman of Labour. "All the discussion is about the election, what the date will be, who's bluffing."

Once his seven-day period of mourning is over, Netanyahu is expected to announce that Israel will go to the polls earlier than thought, probably on 4 September. The Knesset is expected to be dissolved next week, and all parties have already switched into campaigning mode.

It is not uncommon for Israeli prime ministers at the helm of its typically fragile coalition governments to be forced to call elections before their full term is up. What is unusual, in this case, is the relative stability of the present rightwing-dominated government. Indeed, opinion polls published this week indicate that Netanyahu's party, Likud, would be the biggest in the next parliament by some distance. So why the hurry? The immediate reason is domestic.

A controversial law that exempts thousands of ultra-orthodox Jews from compulsory military service is due to expire in August, and Netanyahu has been caught between the secular and religious parties in his coalition.

The "Tal law" is deeply unpopular with Israel's majority secular population, who send their sons and daughters to serve in the army at the age of 18, and it was declared unconstitutional by the supreme court in February.

Secular politicians, including the extreme rightwing foreign minister, Avigdor Lieberman, and centrist defence minister, Ehud Barak, are promoting change, while the small religious parties, which are crucial to the coalition, are fighting hard for ultra-orthodox youths to be allowed to opt for religious study over military service.

Before a Knesset vote next Wednesday on legislative options to replace the Tal law, Lieberman announced that his party's "obligation to the coalition is over". By calling an election, Netanyahu will forestall the risk of his government capsizing and the present law will be extended almost to the end of the year.

There are other, party-political reasons for an early election. The main opposition centrist party, Kadima, which won most seats in the 2009 election, has just chosen a new leader, Shaul Mofaz, to replace Tzipi Livni. That has led to a sharp drop in the polls, with predictions of its number of seats falling from 28 to 13, ratings that Netanyahu, it can be assumed, would like to exploit.

A new centrist party, Yesh Atid (There is a Future), led by the popular TV personality Yair Lapid, is scoring well, with predictions of 12 seats, more if Livni jumps ship to join it. However, an early election would deprive the fledgling party of the time it needs to hone policies and organisation.

According to a poll this week, Likud would get about 31 of the 120 seats; Labour would come in second with 17; and Lieberman's party, Yisrael Beitenu, third with about 14. Together the rightwing parties would have the edge on the combined centrist and left parties.

In a separate poll, 48% of respondents said Netanyahu was best suited to lead the country, way ahead of the other main candidates put together.

Netanyahu is clearly on course to be prime minister again, although the composition of a new coalition is not clear. A fresh mandate from the electorate will strengthen his position in the arenas which are of greatest interest to the international community: the Israeli-Palestinian conflict and Iran.

Neither of these is likely to figure strongly in the election campaign, whose dominant themes are expected to be the economy and "social justice" – the demand of last summer's massive protest movement, which may revive in the coming weeks.

But Iran and the Palestinian issue are critically important to Netanyahu – the first, because he wants action; the second, because he does not.

Securing his own position before the US election in November will give him an advantage. On the so-called peace process, it will help him to resist potential renewed pressure for serious negotiations in the event of Obama's re-election. On Iran, victory at the polls would bolster Netanyahu's campaign for military action against the Islamic republic's nuclear programme.

And it may even tempt him into a window of opportunity for a strike between his own re-election and America's moment of decision. Netanyahu and his cohort, defence minister Barak, stress the military option is still firmly on the table.