(This March 27 story has been corrected to add the locations of casualties in paragraph 19)
JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu on Monday put off a decision on bitterly contested plans for a judicial overhaul amid fears that Israel's worst national crisis in years could fracture his coalition or escalate into violence.
It was unclear how far the bill's delay to next month's new parliamentary session would satisfy either side or cool a crisis that the army chief said on Monday made "this hour different to any before".
"From a will to prevent the rift in the nation, I have decided to delay the second and third reading in order to reach a broad consensus," Netanyahu said in a TV address, calling the move "a chance to avoid a civil war".
The government's plan to enable parliament to override Supreme Court decisions and hold control over judicial appointments triggered some of the biggest protests in Israeli history, with opponents calling the move a threat to democracy.
While some Israeli politicians tentatively welcomed the delay, some of Netanyahu's coalition partners called it a mistake and protest leaders said they would keep up demonstrations until the legislation was dropped entirely.
Shikma Bressler, one of the main protest leaders, said Netanyahu was trying to weaken the demonstrations. "Now is not the time to reduce the pressure, but to increase it," Bressler said.
Netanyahu, on trial on corruption charges which he denies, has promised to ensure civil rights are protected but has not backed down from the central thrust of the reforms.
One of Netanyahu's hard-right coalition partners, security minister Itamar Ben-Gvir, said he had agreed to the delay on a promise the bill would return after the parliamentary recess and a deal to form a National Guard under his ministry - a move opponents fiercely criticise as giving him his own militia.
Tens of thousands of right-wing supporters of the law meanwhile rallied outside parliament at the urging of Ben-Gvir and other leaders.
Groups of Jewish settlers and far-right football fans favouring the judicial changes had also urged protests and police said they were reinforcing after social media threats of violent attacks on left-wing Israelis.
Netanyahu's decision to put off the legislation also followed opposition from the Histadrut labour union, which grounded flights at Ben Gurion airport and planned to close seaports, banks, hospitals and medical services.
The union called off the strikes after Netanyahu announced the delay.
The White House welcomed Netanyahu's announcement, urging Israeli leaders to find a compromise as soon as possible and adding that democratic societies are strengthened by checks and balances.
'RIGHT THING TO DO'
Israeli President Isaac Herzog said stopping the bill was "the right thing to do". Herzog staged a rare intervention into politics earlier on Monday to plead with Netanyahu to halt his judicial overhaul for the sake of national unity.
Opposition leader Benny Gantz said the decision was "better late than never" but added he would not compromise on the "basics of democracy" in any dialogue on the new law.
On the streets, the views of Israelis attending the opposing rallies underscored the continued divisions.
"The proposal that Netanyahu is putting forward was very dangerous. Any democracy needs checks and balances," said Benjay Saier, an opponent of the new law.
"No one wants the reform to be stopped because it's not OK. They started a process and they need to complete it," said government supporter Avia Itzhaky, 23.
NATIONAL SECURITY
The crisis, among the worst in Israeli domestic political history, coincided with escalating violence in the West Bank. More than 250 Palestinian gunmen and civilians have been killed by Israeli forces and more than 40 Israelis and foreigners have been killed by Palestinians in the West Bank, around Jerusalem and in Israel over the past year.
Palestinian residents of Huwara, a town near Nablus in the Israeli-occupied West Bank, said Israeli settlers and soldiers had stormed the town on Monday, firing rifles into the air. Witnesses said settlers torched a vehicle and hurled stones at an ambulance trying to reach the wounded.
Concerns over national security and what he called a "deep split" in Israeli society had prompted Defence Minister Yoav Gallant to urge Netanyahu to shelve the legislation, prompting the prime minister to decide to sack him on Sunday.
That decision triggered more mass protests overnight, aggravating Israel's weeks-long crisis and threatening fractures in the ruling coalition.
Gallant's removal fed accusations the government was sacrificing the national interest for its own, especially at a time when the army is reinforcing in the West Bank with violence there increasing.
Gallant welcomed Netanyahu's decision to put off the law.
The shekel, which has seen big swings over recent weeks as the political turbulence has played out, had strengthened as much as 1.6% on Monday, but the recovery fizzled later on and it ended just 0.1% stronger than upon opening.
(Additional reporting by Maayan Lubell, Ari Rabinovitch, Dan Williams, Henriette Chacar, Emily Rose, Nidal al-Mughrabi and Steven Scheer; Writing by James Mackenzie and Angus McDowall; Editing by Mark Heinrich, Alison Williams and Howard Goller)
