Foreign Ministry sources said Tuesday that Israel's ambassador to Australia will have his term cut short in the wake of an interview to Haaretz, in which he called Australia and Israel white sisters amid "the yellow race."

Naftali Tamir was on his way back to Canberra on Tuesday following a two-week review process in Jerusalem where he denied having made the comments attributed to him, Foreign Ministry spokesman Mark Regev said.

But ministry sources say that an internal tender for his post - which includes non-resident accreditation to New Zealand and Papua New Guinea - will be issued shortly. They add that several senior diplomats have already shown an interest the post.

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"Israel and Australia are like sisters in Asia," Tamir told Haaretz during a visit to Israel three weeks ago. "We are in Asia without the characteristics of Asians. We don't have yellow skin and slanted eyes. Asia is basically the yellow race. Australia and Israel are not - we are basically the white race. We are on the western side of Asia and they are on the southeastern side."

Following the publication of the interview on October 13, Tamir was immediately recalled to Israel to explain his comments. The ministry swiftly condemned the reported remarks as "grave and unacceptable," adding that it would not return to business as usual if its internal review confirmed the ambassador had indeed made the statements.

Earlier Tuesday, Regev refrained from commenting on whether Tamir's version of events had been accepted by his superiors at the ministry, stating only: "The ambassador denied the remarks attributed to him immediately following their publication, and he did so through all stages of the internal Foreign Ministry review. He is on his way back and will arrive in Australia tomorrow."

Under normal circumstances, Tamir, who arrived in Canberra in January 2005, would have been expected to remain in post for four years, but his return date is now likely to be sometime in 2007.

Tamir's early departure from his post is aimed at minimizing the damage caused by the affair, say sources close to the ministry. The plan to shorten Tamir's term will be made clear to his host governments, a ministry insider added.

In Australia, the comments were labeled as "completely unacceptable" by senior opposition politician Kevin Rudd, while New Zealand's Prime Minister Helen Clark was quoted as saying: "If the remarks are as reported, of course they are completely unacceptable. If they were made by anyone in our public service, there would be quite severe consequences."

The affair, given its widespread coverage in the media in Australia, placed the Jewish community there in an embarrassing position, as they struggled to balance their customary support Israel's highest representative in the region and with efforts to distance themselves from the comments.

It is still unclear what kind of reception Tamir will face upon his return to Canberra. While the Jewish community is likely to rally round the ambassador, the Australian government and the Australian media may be less understanding.

Members of Australia's Jewish community fear that Tamir's return will cause further damage, providing ammunition to those who charge that Israel is a racist state and that the Australian government should moderate its overtly pro-Israel stance.

Some who have followed the affair closely have speculated that firing or recalling Tamir without conclusive proof that he actually made the comments would leave the ministry open to legal action. "The ministry didn't have much room for maneuver," said one insider.

The ministry's response to the incident has been followed closely by those keen to see how its relatively new leadership of Foreign Minister Tzipi Livni and director-general Aharon Abramovich handles a crisis.

While the ministry's initial strong and swift response won widespread praise, those following the affair will take note as to whether senior officials will follow through quickly with seeking a suitable replacement for Tamir.