Benjamin Netanyahu has been accused of trying to deflect anger over his handling of the Covid-19 pandemic by proposing cash handouts for all Israelis.
The Israeli prime minister had presented a 6bn shekel (£1.4bn) package on Wednesday night, which included payments of up to £175 for individuals, rising to nearly £700 for families.
He argued it would boost spending and “get the economy moving faster”.
But the move, which needs cabinet approval, was rejected on Thursday by senior officials, including government ministers.