The government will allow 1,200 children of foreign workers whose visas have expired to remain in Israel until the end of the school year, next July.
Previously, the government had ruled that the children, most of whom were born and raised in Israel, would have to leave with their families by November 1, but it reversed its decision following a public outcry.
The decision highlights the difficulty of formulating a consistent policy on an estimated 400,000 foreign workers, close to three quarters of whom lack a valid work visa.
Britain will abstain from a crucial United Nations vote today over whether to endorse the Goldstone Report, despite urgent calls from Israel for Gordon Brown to reject it.
The UN Human Rights Council will vote in Geneva on whether to accept the report, which was strongly critical of Israel’s conduct during the Gaza offensive in January this year.
Israeli Prime Minister Binyamin Netanyahu reportedly held a heated phone conversation with Mr Brown yesterday where he claimed that if the resolution against Israel was to pass; it could completely derail the peace process.
The Israeli government is split over the correct response to Turkey’s decision to cancel a joint military exercise. While the Foreign Ministry is in favour of a belligerent stance, the defence establishment is trying to lower the tensions.
Israeli, American, Italian and Turkish warplanes were due to simulate dogfights against each other this week over Turkey, but Ankara barred Israel from participating at the last minute, in protest at Operation Cast Lead. The other participants then pulled out, leading to the cancellation of the manoeuvre.
Film director Ken Loach, a supporter of the Israeli film boycott, has criticised the chief executive of Israel’s leading film distribution company, who, he claims, did not inform him that his latest film would be shown at the Haifa Film Festival.
Mr Loach has frequently attacked Israel’s action in Gaza and was among the high - profile figures urging organisers of the Toronto Film Festival to drop a celebration of Tel Aviv last month.