The dispute is forcing Prime Minister Benjamin Netanyahu into a delicate balancing act in which he must at once please American Jews and placate the Orthodox members of his government. American Jews comprise the world's second largest Jewish community and have provided a source of unconditional moral support, lobbying and fundraising for decades.
While most observant American Jews identify with the Reform and Conservative movements, Israeli religious affairs are dominated by stricter Orthodox law.
Israel's Orthodox rabbinical establishment wields a monopoly over key aspects of daily life, such as marriage, divorce, burials and circumcisions. Reform and Conservative rabbis are not recognized, and their movements are largely marginalized. Most Jews in Israel, while secular, follow Orthodox traditions.
These long-simmering tensions between the world's two-largest Jewish communities have been aggravated by a series of steps by religious elements in Netanyahu's coalition government meant to halt attempts by the liberal streams to win recognition in Israel.
"Israel does not meet the standards of religious freedom and pluralism that one should expect of a Western democracy. And the fact is that American Jews have simply lost patience with the second-class status of liberal Judaism in Israel," Rabbi Eric H. Yoffie, the former head of the Reform movement, wrote in the Israeli daily Haaretz. He listed "week after week of religious crises" in Israel.
The current religious-nationalist government earlier this month cancelled reforms meant to ease conversion to Judaism, unraveling painstaking efforts by the previous government to weaken the grip of Israel's Orthodox establishment. That was followed by inflammatory rhetoric from the Cabinet minister responsible for religious affairs, disparaging Reform Jews.
Netanyahu is in a tenuous situation. His narrow coalition is bound together by two ultra-Orthodox factions who can bring down the government if Netanyahu pursues policies not to their liking.
At the same time, American Jews are growing increasingly frustrated with Israel's policies. A major survey on American Jews by the Pew Research Center from 2013 showed they are still strongly attached to Israel, but that connection wanes with younger Jews and with Jews who don't identify with a particular Jewish denomination.
The Reform and Conservative movements have demanded greater recognition in Israel for their practices, most prominently at Jerusalem's ultra-Orthodox led Western Wall, the holiest site where Jews can pray. And they complain of discrimination, recently accusing Israel's president of cancelling a Conservative bar mitzvah ceremony at his residence to placate Orthodox opposition. President Reuven Rivlin's office said it wasn't his place to decide "a war of religions."
There were signs of change in Netanyahu's previous coalition government, in which ultra-Orthodox parties were in the opposition. Progressive parties stripped away some of the entitlements ultra-Orthodox parties had previously legislated, and after much political wrangling, a bill was passed weeks before the government was dissolved that would allow municipal rabbis to hold special conversion courts, potentially opening the door for liberal rabbis to help perform conversions.
The bill sought to smooth the conversion path for some 350,000 people, many immigrants from the former Soviet Union who have Jewish ancestry but who face difficulty marrying in Israel or receiving Jewish burials. The Reform and Conservative Judaism movements had hoped the bill could chip away at the Orthodox monopoly, even if it wasn't as far-reaching as they might have wished.
But after the elections in March, with the new government formed, the bill, along with other challenges to the ultra-Orthodox community, including changes to military service, appeared to be doomed.
Tzipi Livni, an opposition lawmaker whose party tabled the conversion bill, said its scrapping could further alienate American Jews.
"Even though there are different streams, we are part of one people and I believe that this is the message that the Israeli government — any Israeli government — should send to the American Jewry," Livni told The Associated Press.
Adding fuel to the fire, the country's Religious Affairs Minister, David Azoulay, has publicly blasted Reform Jews, recently telling Israel's Army Radio that he doesn't consider them to be Jewish.
"A Reform Jew, from the moment he stops following Jewish law, let's say this is a problem. I cannot allow myself to say that he is a Jew," he said. He later dialed back his comments, saying he was concerned about assimilation and that he would pray for all Jews "to return" to the faith.
Netanyahu has quickly distanced himself from what he called Azoulay's "hurtful" comments, saying they don't reflect the government's position. He said he reminded Azoulay that Israel is a home "for all Jews."
Netanyahu has also recently called for "roundtable discussions" between his Cabinet secretary, the Jewish Agency, which acts as a link to the Jewish world, and leaders of the liberal streams in Israel.
The talks would allow the liberal streams to voice their grievances and perhaps "hasten" some bureaucratic logjams that could lead to greater equality, like access to state funding or land for institutions, said Natan Sharansky, the chairman of the Jewish Agency. He said the discussions were a way for Netanyahu to make progress on the issue, albeit incrementally, outside the constraints of his government partners.
Meanwhile, in an apparent conciliatory gesture, President Rivlin is set to host a study session this week with representatives from various Jewish streams that will focus on Jewish unity.
Yedidia Stern, a vice-president at the Israel Democracy Institute, a think-tank, said that Netanyahu is left with little room to manoeuvr, like many before him, in the face of the political power of the ultra-Orthodox. Stern said Netanyahu should fire Azoulay "immediately," to make real amends with Reform Jews, but doing so would put his coalition at risk.
"Diaspora Jews are a central strategic front for the state of Israel," Stern said. "What the Israeli government is doing is to slap them in the face over and over and over again."