JERUSALEM (Reuters) - Israel's cabinet on Sunday overwhelmingly approved an economic reform plan aimed at easing living costs in response to weeks of popular social protests.
Ministers voted 21-8 in favour of the proposals drawn up by a government-appointed panel lead by economist Manuel Trajtenberg, and submitted to Prime Minister Benjamin Netanyahu last month.
"Implementation of the report will lower the cost of living, cut taxes, boost disposable income and make housing more affordable," Netanyahu told cabinet ministers, a statement from his office said.
The plan still faces an uphill battle in parliament before some of its key provisions can be implemented.
Netanyahu had sought a vote on the plan a week ago but he could not muster enough votes from ministers in his own Likud party and in coalition partners.
Israeli media reported that Netanyahu made a deal with the conservative Yisrael Beiteinu party on more benefits for those who have recently completed their compulsory military duty and for public housing.
The plan calls for cutting the defence budget by 5 percent in 2012, while raising capital gains and corporate taxes. That would produce money needed to boost social-welfare spending without breaching fiscal targets.
The Trajtenberg committee was formed after weeks of massive public demonstrations calling for lower living costs -- particularly for fuel, food, housing and child care -- rocked Netanyahu's right-wing coalition government.
Protesters throughout the summer camped out in major cities and their activism culminated last month in one of the largest-ever demonstrations in Israel's history.
The protests along with threats of consumer boycotts led some foodmakers to drop prices on cheeses and other staples.