The 3,600 members of the Likud Central Committee began voting at 0700 GMT for the leadership of three key institutions which were likely to fall into the hands of activists who firmly oppose the creation of a Palestinian state.
The vote was taking place as US Secretary of State John Kerry wrapped up four days of intensive shuttle diplomacy in a bid to draw Israel and the Palestinians back to the negotiating table.
The main player is Deputy Defence Minister Danny Danon who is likely to be elected chairman of the central committee.
In an initial vote on Tuesday, Danon, 42, took control of the Likud party's conference, a largely symbolic role but one which highlighted the growing power of the rebels.
So popular is Danon within the party that Netanyahu quietly withdrew his candidacy for the role rather than face defeat by his young rival, press reports said.