Ehud Barak’s Labour Party has vetoed a bill in the Knesset describing Jerusalem as the Jewish capital.
The party says that while Jerusalem should be asserted as the capital of Israel, a move to make it a religious capital would be misinterpreted by the rest of the world as a potential act of aggression.
The government cannot support a bill if a party in the Knesset uses its power of veto.
The bill was proposed by Habayit Hayehudi (Our Jewish Home) MK Zevulun Orlev, in order to state clearly that a “United Jerusalem is the capital of the Jewish people.”
Mr Orlev said: "I, for my part, commit to find the way to bring the bill to vote in spite of the Labour Party. This bill is declarative, yet of the utmost importance in order to sharpen and fix the status of Jerusalem as the eternal capital of the Jewish people.
"This is a betrayal by the Labour Party, and they are turning their back on Zionist values and the path of Ben-Gurion who established Jerusalem as the country's capital in opposition to the opinion of the countries of the world."
Welfare and Social Services Minister Isaac Herzog of the Labour Party said: "This law would not serve the interests of Jerusalem and the state of Israel.
"Every Jew understands that Jerusalem is the capital of the Jewish nation. A legislative move, at this point in time, would be likely to be misinterpreted."
The Association for Civil Rights in Israel called the vetoed bill "a draconian initiative which delegitimises legitimate public debate, and whose goal is to silence free debate on important questions. One hopes that the Knesset will come to its senses and remember that its role is to protect freedom of speech, and not trample it."