The measure, which would have given more power to rabbis, will be withdrawn for six months as the sides try to hammer out an alternative.

Prime minister Benjamin Netanyahu said a way has to be found "to preserve the unity of the Jewish people".

Putting the bill on the backburner drew praise from liberal Jewish groups who opposed the legislation and waged a vocal campaign to get it thrown out.

The bill, proposed by one of Netanyahu's coalition partners, aimed to provide easier conversion for immigrants from the former Soviet Union - many of whom are not Jewish under Jewish law.

It would have liberalised the conversion process inside Israel to some extent while at the same time strengthening the control of Orthodox rabbis.

Rabbi Gilad Kariv, head of the Reform Movement in Israel, praised Netanyahu "for preventing significant harm to the unity of the Jewish people and for giving precedence to acts of dialogue over unilateral, aggressive legislation".

America's Conservative movement, too, lauded the premier for stopping a bill that "could have divided the Jewish people".

The deal to shelve the bill for six months was hammered out by cabinet secretary Zvi Hauser at the behest of the prime minister.

"The changes in the conversion laws should be reached through broad understanding to prevent a schism in the Jewish people," Netanyahu said.

"Unity is a primary national interest and I am determined to preserve it."

Natan Sharansky, who is head of the Jewish Agency for Israel, will lead a committee of the Reform, Conservative and Orthodox movements to form the authority that would complete the legislation.

The leader of the Jewish Federations of North America, Jerry Silverman, said: "We truly support this process of a dialogue table, which allows the participants time to discuss this important issue appropriately and reach a solution that protects the bonds between Israel and the Diaspora.

"And we are thrilled that Natan Sharansky will be leading the process."

A spokesman for the Orthodox Shas party, however, said that his movement were not part of any such deal and did not accept it.

The bill is the brainchild of Knesset member David Rotem.

It would make Israel's chief rabbinate of Israel the sole body authorised to deal with conversions, meaning that all conversions will be carried out only after the convert "accepts the burden of Torah and commandments according to Jewish law".

Critics feared that the wording of the bill would change the legal status of non-Orthodox conversions in Israel and affect the legibility of such converts to the Law of Return.