Israel has postponed discussion of the bill which will allow the country to seize church land that has been sold to private developers.
Under pressure from church leaders, the Israeli government on Sunday froze debates over the debated bill. Israeli churches have repeatedly blocked the law, claiming that it could allow Israel to take over valuable property.
The bill's sponsor, member of parliament Rachel Azaria, said church leaders had misinterpreted the bill. He said he was trying to protect thousands of residents living in buildings built on rented land.
Azaria said residents could face massive price increases or even expulsion from private developers when their leases expire in the coming decades. Uncertainty has caused property values to decline.
Azaria said he hoped to reach a settlement with the churches in the coming weeks.