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Yesterday's general strike declared by the Histadrut labor federation lasted less than a day. The crisis was resolved that evening, 10 hours after it began, when the government and the union reached a deal to compensate thousands of unpaid municipal workers.

According to the settlement, the Histadrut will loan a total of NIS 17 million to 620 employees in the 10 local authorities worst-hit by financial difficulties. A fund will be created for this purpose. This will be the first time the Histadrut will loan funds to workers who are not on strike.

In addition, the Histadrut received documents proving the state has transferred funds to 20 local councils to pay wages.

The state said the government would discuss amending the Municipalities Law to allow sanctions against local authorities that fail to pay their employees' wages - a key Histadrut demand - during the next cabinet meeting.

The amendments would allow the state to dismiss local council heads who delay the wages of more than 25 percent of employees for more than two months.

The parties agreed to come up with a payment plan for the employees of several dozen religious councils whose wages have not yet been paid. The plan is to be presented by Independence Day, April 24.

Officials in the Prime Minister's Office said the agreement, formulated by Director General Raanan Dinur, is almost identical to the draft presented to the Histadrut on Monday, before the strike was declared. "Histadrut chair Ofer Eini wanted the strike for dramatic effect," they said.

Histadrut officials denied the claims, saying the government expedited negotiations only to keep the crisis from worsening.

Negotiations between the government and the Histadrut were brokered by Shraga Brosh, Manufacturers Association head, who had been sympathetic to the Histadrut's cause. He accused the government for the delay in paying wages.

The strike caused the closure of all local authorities, except for departments dealing with special education. In addition, all government ministries, with the exception of the Defense Ministry, were closed to the public. The National Insurance Institute, Employment Service, Israel Lands Administration, vehicle licensing office and the registration office were also shut.

Eini asked for the public's forgiveness yesterday morning, but said the issue of employees' wages is a matter of principle and called on Israel's citizens to "show restraint and patience."

Before the strike was declared, the state petitioned the National Labor Court, asking it to stop the strike. Court president Steve Adler, however, preferred to postpone his verdict, encouraging the parties to reach a settlement on their own.