The Ministerial Committee for Legislation will delay its vote on a bill allocating income allowances to full-time yeshiva students by two to three weeks.
The bill was introduced this week by the chairman of the Knesset Finance Committee, MK Moshe Gafni (United Torah Judaism), but drew fierce criticism from ministers and members of the opposition alike.
The Labor and Yisrael Beiteinu parties announced earlier on Saturday that their ministers would vote against the bill.
Social Affairs Minister Isaac Herzog (Labor) said on Saturday that the bill sabotages attempts to incorporate the ultra-Orthodox sector in the job market.
Yisrael Beiteinu released a statement saying its ministers would oppose the bill, as it "perpetuates unemployment and damages the Israeli economy."
"Furthermore, the bill bluntly discriminates against Israeli university students who serve in the army and pay their taxes," the statement said.
Following the criticism, Finance Minister Yuval Steinitz (Likud) met Saturday with ultra-Orthodox MKs including Gafni and Interior Minister Eli Yishai (Shas) to negotiate a new version of the bill, which will be presented to the other members of the coalition on Sunday.
United Torah Judaism and Shas, both members of the governing coalition, have made their support for the 2011-2012 budget conditional on the acceptance of the estimated NIS 150 million in allowances for yeshiva students.
Prime Minister Benjamin Netanyahu does not have a Knesset majority for the budget without the two parties, and if the budget is not passed by March 31, new elections will have to be called within 90 days. Netanyahu and Finance Minister Yuval Steinitz are keen to pass the budget and Economic Arrangements Bill by the end of December.
The High Court of Justice banned similar payments in June, saying they discriminated against students in academic institutions in favour those in yeshivas, and ordered them stopped as of 2011.
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