The Prime Minister's Office on Wednesday withdrew its promise to conduct direct negotiations with student organizations regarding their demands that the state lower university tuition and to increase higher education budgets.

Following a nine-day strike, both national students unions maintain that the PMO promised to hold such a meeting.

Prime Minister Ehud Olmert's top aid Oved Yehezkel on Tuesday called the chair of the National Students Union and asked to set a meeting with student representatives, but did not specify a time.

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Students unions had intended to keep the planned negotiations a secret to prevent leaks that might jeopardize the negotiations.

The fear of leaks materialized on Wednesday, and several hours after reports on the proposed talks came out, the PMO released a statement saying, "There will be no negotiations with students."

The PMO confirmed that the students had requested a meeting with Olmert, but denied that they were promised direct negotiations.

According to the PMO, "the time is not yet right" for a meeting, and tuition will not be negotiated at all, regardless of time.

Senior higher education lecturers on Wednesday morning canceled their proposed strike after the coordinating committee of academic faculty organizations reached an agreement with Education Minister Yuli Tamir, following a meeting between both sides.

The lecturers canceled the unilateral strike on the condition that the Shochat Committee would recommend changes in their wage agreements, and negotiations would begin.

Earlier, senior lecturers at colleges and universities across the country threatened to embark on the second day of their strike, with their demand that universities not change the employment system for senior faculty, as the Shochat Committee on higher education reform is recommending.

The committee wants institutions of higher education to provide grants to a small number of top scientists, according to proposals obtained by Haaretz. The additional remuneration, which would be limited to a few years, is designed to attract leading academics often lured by better-paying jobs abroad.

The student strike, which began a week ago, is set to continue.

The students call for a restoration of NIS 1.2 billion in budget cuts and for lower tuition.

Thousands of students rallied Tuesday near the Prime Minister's Residence in Jerusalem, although only about 300 had been expected. They shouted slogans such as "No education, no state," and booed every time speakers mentioned the chairman of the education committee, Avraham Shochat.

The national student union said Tuesday that the strike would continue for at least another month or two, while other student groups said the protest would continue until their demands were met.

"My struggle is social," Liz Ohayon, a student at Sapir College in Sderot, said Tuesday. "The state has an interest in perpetuating poverty. High tuition costs are a way of perpetuating gaps. It reflects ethnic and social discrimination."

The Shochat Committee is proposing a system of student loans and grants while apparently planning to recommend a tuition hike - a move Ohayon rejects.

"What difference will a loan make?" she asked. "We'll have to pay it back with interest." Ohayon said she was offered a loan, but decided to pay for her tuition by working nights instead.

"Higher education is a civil right that should be provided for free," said Yaron Ezrahi, a professor of political science at the Hebrew University of Jerusalem.

Liora Meridor, who heads the Shochat Committee's tuition subcommittee, said the panel had yet to formulate recommendations on the raising of tuition.

"The opinion of the students is important to me, and the door of the subcommittee is still open to them," she said.