Scholarships awarded to university and college students will be subject to government taxation, a clause of the Economic Arrangements Bill was revealed as stating on Monday, amid recent student protests against the resumption in allowances to full-time yeshiva students.

The proposed bill will be relevant to external scholarships only, and will not apply to funds awarded by the educational institutions themselves.

Kadima, the Knesset's largest opposition party, offered a scathing criticism of Prime Minister Benjamin Netanyahu's government over the Economic Arrangements Bill clause, saying "another bluff Netanyahu tried to hide is blowing up in the face of the Israeli public."

"Netanyahu is lying again and is laughing the students in the face. Only a cynical and obtuse government could issue such a cruel sanction against the student public," Kadima said, adding that Netanyahu's cabinet was "heartless, even towards those who represent Israel's future."

Kadima MK Yohanan Plesner, in a letter to Netanyahu, asked the premier to "come to your senses and cancel this cruel action immediately. The decision could hurt those living in the periphery and the chances of young men, including those released from the Israel Defense Forces, to acquire a higher education in Israel."

The revelation comes as thousands of students marched in Jerusalem on Monday to protest a controversial bill calling for resumption in allowances to full-time yeshiva students, the cost of which has been included in the state budget for the next two years.

Despite Prime Minister Benjamin Netanyahu's appointment of a committee on Sunday, Finance Minister Yuval Steinitz included a sum of NIS 111 million intended for yeshiva students' stipends in the state budget which was approved by the Knesset last week.