Israeli Prime Minister Benjamin Netanyahu on Monday night paused a judicial overhaul that triggered a general strike, political division and mass protests in the country's most severe domestic crisis in years.

The proposed reforms would curtail the authority of the Supreme Court and give politicians greater powers over the selection of judges.

After nearly three months of increasing tensions, the legislation will now be considered further in the next session of parliament, which begins in the second half of April.

"Out of a sense of national responsibility, out of a will to prevent a rupture among our people, I have decided to pause the second and third readings of the bill" to allow time for dialogue, Netanyahu said in a broadcast.

His comments came a day after he sacked his defence minister, Yoav Gallant, who had cited national security concerns in calling for a halt to the legislative process.

Earlier Monday, President Isaac Herzog, who holds a largely ceremonial role, made a similar demand, and tens of thousands of protesters had rallied near parliament in Jerusalem after the strike declaration.

Flights were disrupted, hospitals stopped non-emergency services, and even diplomats walked off the job.

But immediately after Netanyahu announced the pause, Arnon Bar-David, chairman of the Histadrut trade union confederation, called off the strike.

About 80,000 demonstrators joined the Jerusalem rally, Israeli media estimated.

A nearby counter-demonstration attracted thousands of right-wing backers of the overhaul, an AFP journalist said, after Israel's National Security Minister Itamar Ben-Gvir urged their attendance.

His far-right Jewish Power party revealed on Monday that the decision to delay the legislation involved an agreement to expand the minister's portfolio after he threatened to quit if the overhaul was put on hold.

- 'Tangible threat' -

The judicial proposals have sparked concern from Israel's allies, including the United States, and Washington welcomed Netanyahu's pause "as an opportunity to create additional time and space for compromise", White House Press Secretary Karine Jean-Pierre said.

Israeli opposition leader Yair Lapid said he was ready to engage in dialogue over the proposed changes "if the legislation truly and totally stops," and the government was not bluffing.

Demonstrators have for months decried the reform plans as a threat to Israel's democracy.

One of the protest groups, the Umbrella Movement Against Dictatorship in Israel, feared a trick to weaken their movement. In a statement, they sought a complete halt to the legislative process and said they would continue demonstrating otherwise.

"This is not a victory at all, the struggle must continue," Sharon Hefez, a 59-year-old writer in Tel Aviv said.

Former defence minister Benny Gantz, a leading opposition figure, said he was immediately ready for talks mediated by Herzog.

"Better late than never," Gantz said of Netanyahu's pause.

Herzog, who had previously raised the spectre of civil conflict, said: "Stopping the legislation is the right thing. This is the time to begin a sincere, serious and responsible dialogue that will urgently calm the waters and lower the flames."

Netanyahu, in his address, said that "we can't allow a civil war".

Gallant, the outgoing defence minister who had been a staunch ally of Netanyahu, on Saturday cited a "tangible threat to Israel's security".

Referring to threats by reserve military personnel not to report for duty, he said: "The growing social rift has made its way into the (army) and security agencies".

Moments after Netanyahu fired Gallant on Sunday, demonstrators converged on a central highway in Tel Aviv, blocking traffic and burning tyres. Some threw metal barricades at mounted officers while police deployed water cannon.

- 'Mad reform' -

At the Jerusalem protest on Monday, Keren Mimran, a 57-year-old tech worker, told AFP: "We are calling on the government to stop this mad reform."

Figures from Israel's economically important hi-tech sector have played a key role in the protests, and some analysts said uncertainties related to the reforms had already triggered economic decline.

The government, a coalition between Netanyahu's Likud party and extreme-right and ultra-Orthodox Jewish allies, argues the changes are needed to rebalance powers between lawmakers and the judiciary.

According to Lapid, the government "has undergone a hostile takeover by a messianic, nationalist and anti-democratic group".

Lawmakers were scheduled to vote this week on a central part of the proposals, which would change the way judges are appointed. That has now been put off.

A parliamentary committee has already amended the draft law to make it more acceptable to opponents, but the opposition ruled out backing any part of the reform package until there is a pause in all legislative steps.

Netanyahu last week vowed to "responsibly advance" the reforms and "end the rift" they have caused.

In response, Attorney General Gali Baharav-Miara on Friday accused him of "illegal" public intervention in the process, citing potential conflict of interests due to his ongoing trial.

The premier is facing charges of bribery, fraud and breach of trust, which he denies.