A government initiative to offer West Bank settlers compensation packages to evacuate their homes ahead of a peace deal with the Palestinians has infuriated right-wing groups.
However, the bill's backers claim that as many as 10,000 families would sign up for the programme.
The new legislation is being championed by Vice-Premier Haim Ramon and started as a grassroots effort by Labour Party MK Collette Avital and Meretz MK Avshalom Vilan.
Prime Minister Ehud Olmert has reportedly offered the Palestinians 93 per cent of the West Bank in the current ongoing peace talks, a withdrawal that would entail the evacuation of dozens of settlements.
Under the compensation bill, each family would receive around $300,000 (£150,000) to move back into Israel. The packages will be offered to families that live on the Palestinian side of the security barrier and in areas that are unlikely to remain part of Israel under a peace accord with the Palestinian Authority. Some 300,000 Israelis live in the West Bank. Around 200,000 more live in annexed East Jerusalem but are not included in the initiative.
The legislation was scheduled to be debated at Sunday's cabinet meeting but was pushed back a week due to the lack of time. At the beginning of the meeting, Mr Olmert said he favoured discussing the initiative since it would be irresponsible not to begin planning the evacuation of settlers from the West Bank at time when Israel is negotiating the establishment of a Palestinian state.
The government has come under harsh public criticism for not preparing adequate housing alternatives for settlers evacuated from the Gaza Strip in 2005. Those settlers received roughly the same amount of compensation with an additional amount for the number of years they lived there and how much land they had.
If the cabinet approves the bill on Sunday, it will still need to pass through three readings in the Knesset plenum.
"At a time when serious diplomatic negotiations are taking place there will be a need to make a decision that will include the evacuation of residents from the places where they live," Mr Olmert said. "It is worthwhile for us to begin thinking about the significance and look at the different issues."
Settler leaders slammed the initiative which they said endangered Israel's national security and showed that the Olmert government had not learned from the Gaza unilateral withdrawal.
"This is a law without clients," declared Dani Daya, the chairman of the Council of Jewish Communities of Judea, Samaria and the Gaza Strip [Yesha].
"This is like bribery, since what Ramon is trying to do is to solve the political disagreement over the West Bank settlements with a cheque book, but this will not succeed."
In response to the bill, a group of settlers have set up a programme called Buy a Home in Yesha under which they plan to raise funds to buy the houses of settlers who want to leave so as to place another family there.