The cabinet backtracked several weeks ago from issuing a resolution against ethnic discrimination in Haredi (ultra-Orthodox ) schools, after United Torah Judaism threatened to pull out of the coalition if it was approved.

The resolution was meant to be a first step, if only a declarative one, toward correcting the serious deficiencies in this matter, which were described in 57 pages of the state comptroller's Report released on Tuesday.

The comptroller said that the Education Ministry had failed to properly supervise the registration and placement of Sephardi girls in the schools of the Ashkenazi-run Hinuch Atzma'i network, which are "recognized but unofficial" schools, fully funded by the government.

"The ministry doesn't do what is necessary to prevent discrimination," the comptroller wrote, noting a serious shortage in the number of inspectors overseeing the acceptance procedures in Haredi schools.

The text of the government resolution, obtained by Haaretz, called on the Education Ministry "to within four months make a substantive change in its supervision of the registration and placement of girls in Haredi schools."

It added that this change should include "establishing clear rules for the girls' registration process, and publicizing them," as well increasing supervision of the process and issuing periodic reports on the implementation of the changes.

The Prime Minister's Office had initiated the resolution over a month ago, after it received a preliminary version of the state comptroller's report. Officials had wanted the resolution passed quickly, so that its passage could be included in the response to the comptroller that would appear in the final report.

Copies of the draft resolution were distributed to every minister, and after a copy reached Knesset Finance Committee chairman Moshe Gafni, he worked forcefully to scuttle it, threatening to pull his party out of the government coalition if it was passed - without discussing it with Education Ministry and Haredi education officials.

Gafni argued that the resolution violated the Budget Law, which grants total autonomy to the recognized Haredi education systems, Hinuch Atzma'i and Shas' Maayan Hahinuch Hatorani.

He told Haaretz yesterday that he supports implementing the report's conclusions, so long as the schools' educational autonomy is maintained. He distinguished between "administrative" deficiencies and substantive issues protected by this autonomy. Gafni did not specify how this distinction might affect preventing ethnic discrimination in Haredi schools.

"The independence of Haredi education has nothing to do with discrimination, and we must deal with all the administrative deficiencies," Gafni said. "Our leading rabbis also oppose discrimination; those are their orders."