Hours before the cash was due to be paid out, Finance Minister Yair Lapid halted state payments to religious seminaries that are attended by ultra-Orthodox draft dodgers.
As news of the move spread on Thursday, dozens of angry ultra-Orthodox demonstrators gathered on the light-rail suspension bridge at entrance to Jerusalem in protest of the development. The protests later escalated into riots at several flashpoints around the country.
Funds had already been transferred from the Finance Ministry to the Education Ministry from where they were supposed to be distributed to the seminaries, but on Wednesday Lapid put the brakes on, preventing the money from going any further.
Lapid had initially ordered all such funding to be frozen on Tuesday, hours after the High Court ruled the state should stop making the payments.
The Knesset Yehezkel yeshiva and non-profit in the city of Elad submitted an urgent appeal to the High Court on Thursday to reverse the ruling. The yeshiva claimed in their appeal that the High Court did not give the affected parties, namely the Haredi seminaries, warning or a grace period to respond.
The non-profit also said that they had received the funds for February prior to the decision, and that the money was later removed from their bank account retroactively.
In the meantime the Education Ministry is working together with the Defense Ministry to identify all those ultra-Orthodox men, aged 18-20, who are no longer eligible for funding as students in the seminaries due to their national service obligations.
On Tuesday the High Court of Justice ruled that state funding to ultra-Orthodox yeshivas must be halted for those students, between the ages of 18 and 20, who have received draft summonses since last summer but failed to appear at a military induction center.
Israeli men and women are usually drafted into the army at the age of 18. However, ultra-Orthodox Israeli men were mostly exempt from army or national service until July 2012, when the Tal Law, under which the exemptions were granted, was declared unconstitutional. The dissolution of the law has forced parliamentarians to draw up new legislation that would conscript Haredi and Israeli-Arab men into the military.
MK Ayelet Shaked (Jewish Home), who chairs a committee charged with hammering out the new law, denied Thursday morning that an agreement had been reached by committee members on a formula for enforcing the eventual law by imposing criminal penalties on those who try to evade their service. She said the panel was still working on a text for the bill.