Education minister Rafi Peretz, who is also a rabbi, told the country’s Channel 12 TV station: “I think that it is possible to convert [someone’s sexual orientation].
“I can tell you that I have a deep knowledge of education, and I have done it too,” he said.
Discussing a student who approached him and told him he was gay, Mr Peretz said he hugged him, was kind to him and sought to help him “understand himself well and then decide on his own”.
The politician added: “The goal is that first of all he gets to know himself better and then he can decide.”
Mr Netanyahu later issued a strong statement saying he had personally spoken with Mr Peretz to convey his anger.
“The remarks of the minister of education regarding the LGBT community are unacceptable and do not reflect the position of the government under my leadership,” he said.
The Israeli educational system, he said, “will continue to accept all Jewish children whoever they are and without any difference based on sexual orientation”.
Mr Peretz released a clarification statement two hours after his interview aired, stressing he had not said anyone should send their child to conversion therapy.
Israel’s justice minister Amir Ohana, said it did not go far enough, warning that the therapies were harmful and “could cause youths pain and suffering to the point of suicide”.
Nitzan Horowitz, leader of the left-wing Meretz party, echoed Mr Ohana’s comments as he said gay conversion therapy was a dangerous practice which caused extremely severe circumstances for young people, including suicide.
Israel’s LGBT Task Force, the Aguda, demanded Mr Peretz resign.
Gay conversion therapy, which attempts to change an individual’s sexual orientation through psychological, spiritual and sometimes physical means, has been widely discredited around the world, including by Israel’s health ministry.
The UK government announced such therapies would be banned as part of plans to improve the lives of LGBTQ people.
Mr Peretz leads the Union of Right Wing Parties, a religious nationalist political party brought into the government by Mr Netenyahu after April’s elections.
The politician, a former chief rabbi of the Israeli military, sparked outrage last week when he said that the rate of intermarriage among US Jews was “like a second Holocaust”.