Details of the spat were plastered across Israel's main newspapers Thursday after Netanyahu's office issued a statement urging chief of staff Lieutenant General Benny Gantz and Yoram Cohen, the head of the Shin Bet internal security service, to stop washing their dirty laundry in public.
At a meeting with the pair on Wednesday, Netanyahu "ordered an immediate halt to publicly dealing with issues that should be resolved between the security services," a statement from his office said.
"We all have a national responsibility for the security of the State of Israel and we must continue to fully cooperate for the security of Israel's citizens," he told them at the meeting, which was also attended by Defence Minister Moshe Yaalon.
The quarrel between Gantz and Cohen centres on Israel's preparedness for the 50-day summer war in Gaza.
But it emerged as the Jewish state struggles to control a growing wave of unrest in east Jerusalem which has spread to the occupied West Bank and Arab communities inside Israel, with the army and Shin Bet at the forefront of ensuring public security.
The extent of the dispute was exposed on Monday night in "Uvda" – an investigative news programme broadcast on Israel's private Channel 2 television.
In the programme, Shin Bet officials, who normally maintain a high level of discretion, claimed they had warned the army earlier this year that Gaza's Hamas rulers were possibly preparing a "strategic attack" in July, saying the army did not act on the information.
Gantz was furious, sending an angry letter of complaint to Netanyahu which was published on Thursday in Israel's top-selling Yediot Aharonot newspaper.
In the letter he categorically denied the agency had passed on any warning about the summer war, which erupted on July 8, and warned of the "deep mistrust" which existed between the two bodies.
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"I never thought things would reach this stage, but it has to stop now," he wrote.
Netanyahu on Thursday attempted to further defuse the tensions.
"The army and Shin Bet are two very strong organisations with excellent people," he said, stressing that cooperation between the two bodies was a basis of national security and "saved many lives" during the war with Hamas.
"I, as prime minister, am responsible this cooperation continues," Netanyahu said.
Newspaper Haaretz meanwhile ran a story in which senior police chiefs and officials in the public security ministry accused Shin Bet of failing to share information about planned attacks and disturbances at the flashpoint Al-Aqsa mosque compound and in other areas of annexed east Jerusalem.
Top police officials have urged Netanyahu to press the agency into cooperating more fully with the police, the paper said.
Shin Bet did not comment on either report, but commentators had plenty to say.
"With everything going on in the West Bank and Jerusalem ... it would be best for Shin Bet and the army to put their egos... aside and focus on the job at hand," wrote Yoav Limor in the pro-Netanyahu freesheet, Israel HaYom.
Writing in left-leaning Haaretz, Amos Harel quoted a military officer saying that "this is not a petty ego quarrel, this is about the public's trust."