Basically Israel needs to create a district based system that allows the populace to vote for a specific MK that represents them. Tel Aviv would be broken down into about 10 districts, Jerusalem about 8, and so on. Based on a percentage of the population, forcing a regular census to be taken.
This is a mandatory change in my view, in the current system no one has the ability to voice complaints to a specific person on the national level. This is why there are so many protests in front of the Kenesset.
Bluke has one idea that I can't come to terms with, but then suggest what I like as an alternative.
Create 90 districts (3/4 of the Knesset) and have 1 MK represent a district (and impose a residency requirement). The other 30 seats would be allocated based on the current system but with a much higher threshold like 10%. This would allow the large parties to have their leaders protected and be able to devote themselves to the larger picture while still enabling every one to have a representative. Alternatively, adopt the British system where every seat is district based.
The district system may also be used to give Arabs in Judea and Samaria voting rights (if they'll take them). Since they would be voting for a local representative, while preserving the Jewishness of the State.
On a political science level, it's taking the best parts of the British Parliamentary and American Republican system of Democracy and fusing them together. It can work.
Sharon could have pulled it off (and wanted to change the system), I don't know if anyone else has the power or even the will.Sharon wasn't the best Prime Minister ever, but he had the political clout to do things nobody else could have.