The Israeli government is planning to amend the controversial Jewish nation-state bill that brought thousands of liberal protesters on to the streets of Tel Aviv on Saturday night.

Critics fear the law will give precedence to Jewish over democratic values, tipping the balance away from individual rights to greater nationalism.

Last week Israeli President Reuven Rivlin issued a warning against its most contentious clause, which would allow the establishment of separate communities on the basis of “religion or nationality”.

He said it “could harm the Jewish people, Jews throughout the world and the state of Israel, and could be used as a weapon by our enemies”.

But on Sunday Education Minister Naftali Bennett said the government had agreed a compromise to modify the original proposal.

Israel, he said, “sees developing Jewish communities a national value and will act to encourage, promote and establish them”.

But the change is unlikely to satisfy critics of the bill.

Tamar Zandberg, chairman of the left-wing Meretz party, said, the law “advanced today is not a basic law on nationality but a basic law of racism”.

On Saturday around 7,000 people attended a rally in Tel Aviv to demonstrate against what the New Israel Fund called “a racist, discriminatory bill”.

Ayman Odeh, chairman of the mainly Arab Joint List, attacked the bill as a "law whose purpose is to stick a finger in the eyes of a fifth of Israel's population, spark a dispute and polarize in order to make political gain for the Netanyahu tyranny,” Haaretz reported.