Local sources report that when Netanyahu tried to phone Foreign Minister Sigmar Gabriel to explain why he had cancelled the meeting, Gabriel refused to speak with the prime minister.
German Foreign Minister Sigmar Gabriel moved quickly to defuse a diplomatic row with Israel on Tuesday after Prime Minister Benjamin Netanyahu canceled a face-to-face sit-down in protest of Gabriel's meeting with a far-left Israeli group during an official visit to the Jewish state.
"My policy is clear: not to meet with diplomats who visit Israel and meet with organizations that defame IDF soldiers and try to prosecute our soldiers as war criminals, which diplomats would never consider doing in the United States, Britain or anywhere else", Netanyahu said in a statement.
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But tensions occasionally flare up over Israeli policies toward the Palestinians, as well as settlement construction in the occupied West Bank and Israeli-annexed east Jerusalem.
The German newspaper BILD reported that Netanyahu stated that he refuses to meet with everyone who gives a platform to groups that defame Israeli soldiers and therefore can not meet with the German foreign minister.
Gabriel's choice would be akin to a visit to Germany by Israel's Foreign Minister during which he met with German NGOs investigating German soldiers for war crimes in Afghanistan rather than meet with Chancellor Angela Merkel.
During the meeting, President Rivlin spoke of the debate surrounding the visit and stressed that "as a democratic state, Israel was familiar with receiving criticism from time to time, " but he noted that "also criticism needed to be based in reality".
Yaalon, a former military chief, was forced to resign past year after Netanyahu expanded his coalition government and offered the defense post to Avigdor Lieberman, a firebrand leader of a hard-line nationalist party.
"Our relations with Germany are very important and they will not be affected by this". Instead, they routinely criticize Israeli policy and its military. But he added that it did not spell "the end of diplomatic ties between the two countries".
Israeli opposition lawmaker Tzipi Livni called Netanyahu's cancellation of the meeting a "strategic mistake" that stems from "fear and weakness".
"It is completely normal that we speak with civil society representatives during a visit overseas", he said.
Germany in March canceled an annual meeting of German and Israeli leaders planned for May amid rising frustration in Berlin with settlement activity in the West Bank. "It is an army made up of all our children".
Norbert Roettgen, who heads the German parliament's foreign affairs committee, said it plainly: "The differences are serious, everyone who holds Israel close to their hearts cannot help but be sad and depressed by this blockade of (peace talks)".
"The German government gives large amounts to organizations - Palestinian, Israeli, European - that demonize Israel", said Steinberg.
Both organisations have become popular targets for right-wing politicians, who accuse them of damaging Israel's reputation overseas and putting Israeli soldiers and officials at risk of prosecution.