The hareidi-religious party dropped its insistence Thursday on retroactive child allowance payments, according to Army Radio. Instead, a new monthly assistance allowance will be instituted to aid large families, many of whom are constituents of UTJ.



Sephardic hareidi-religious party Shas, already a member of the government, earlier agreed to a deal in which current child allowance cuts will stand, but future cuts will be eliminated.



UTJ slammed Shas when the deal was announced, for reneging on its campaign promise to insist on restoring child allowance payments to previous levels.



Thursday’s deal with UTJ was negotiated by Justice Minister Chaim Ramon, but must still pass muster with the two senior spiritual leaders of the party, the Gerrer Rebbe, Yaakov Alter, and Rav Arye Leib Steineman.



The agreement will be approved – or rejected – by Sunday, when the two rabbis will leave for a first-time united effort to raise funds in the U.S. and other countries for married yeshiva students in advanced studies. It is unlikely that any action would be taken on an agreement without the stamp of approval by the two renowned rabbinical leaders.



UTJ voted on Wednesday against the 2006 budget which included a hike in the price of bread, a subsidized staple which figures prominently in the diets of families living at and under the poverty line.



After the vote, Prime Minister Ehud Olmert met with UTJ representatives in another attempt to resolve outstanding issues blocking the party’s agreement to join the coalition.



UTJ Knesset members Yaakov Litzman and Moshe Gafni told reporters after that meeting that no resolution had been reached. Litzman chairs the Knesset Finance Committee, which will begin discussions of the budget on Tuesday.



Litzman has announced that he will not allow the budget to pass in the committee if UTJ has not joined the coalition by then, and said he might step down instead.