The Church of the Holy Sepulchre in Jerusalem will re-open at 4am on Wednesday morning after it emerged that the country's government will freeze a controversial church lands bill and the Jerusalem municipality will postpone a recent bid to collect taxes from church-owned properties.

The climbdown by the Israeli government came after the sensational and what now appears to be historic decision to close the church on Sunday, agreed upon by the Greek Orthodox, Catholic and Armenian church leaders.

Israel's prime minister, Benjamin Netanyahu and the Jerusalem mayor Nir Barkat established a team earlier today headed by the regional cooperation minister Tzachi Hanegbi to try to formulate a solution concerning the issue of tax collection from the churches, according to a statement by the prime minister's office.

A statement from the Church leaders tonight said: 'We, the heads of Churches in charge of the Holy Sepulchre and the Status Quo governing the various Christian holy sites in Jerusalem – the Greek Orthodox Patriarchate, the Custody of the Holy Land and the Armenian Patriarchate –- give thanks to God for the statement released earlier today by prime minister Netanyahu and offer our gratitude to all those who have worked tirelessly to uphold the Christian presence in Jerusalem and to defend the Status Quo.

'After the constructive intervention of the prime minister, the Churches look forward to [engaging] with minister Hanegbi, and with all those who love Jerusalem to ensure that our Holy City, where our Christian presence continues to face challenges, remains a place where the three monotheistic faiths may live and thrive together.

'Following these recent developments we hereby announce that the Church of the Holy Sepulchre, that is the site of the crucifixion of Our Lord and also of His Resurrection, will be reopened to the pilgrims tomorrow, February 28, 2018 at 4am.'

Earlier, amid what the Israeli newspaper Haaretz called a 'crisis', heartbroken pilgrims found themselves unable to worship at the site held to be that of the death and resurrection of Jesus. Netanyahu asked Hanegbi to look into the matter of land sales in Jerusalem, and all pending legislation on the matter will reportedly be shelved while Hanegbi reviews the issue.

City Hall caused outrage among church leaders across denominations by its attempt to make any church properties that are not places of worship retrospectively subject to municipal taxes. The municipality claims that the three Christian denominations collectively owe some 186 million shekels ($53 million) in back taxes.

The closure of the internationally iconic church coincided with a meeting by the ministerial committee for legislation, which had been scheduled to discuss a bill, supported by Israeli settlers, allowing the state to expropriate land in Jerusalem that the Greek Orthodox and Catholic churches have sold off since 2010 to private investors. Discussion of that bill has since been postponed, according to Haaretz.

Christian Today revealed yesterday that the decision to close the holiest church in the world was instigated by the Greek Orthodox Patriarch of Jerusalem, Theophilos III, and brought to a meeting of church leaders on Saturday before being kept secret until the dramatic move on Sunday at noon in the Holy City.

The bill would have authorised the finance minister, with the approval of the constitution, law and justice committee in the Knesset, the Israeli parliament, to expropriate lands sold since the beginning of the decade in return for compensation for the companies that bought the land.

Yesterday, the Bishop of Southwark, Christopher Chessun, called on Christians around the world to show 'solidarity' over the indefinite closure of the church, expressing his disapproval bill affecting church lands and the new taxes on churches that he said are 'unfair, inappropriate and arbitrary' in an interview with Christian Today from the Holy Land.

The statement from Netanyahu's office said today: 'Israel is proud to be the only country in the Middle East where Christians and believers of all faiths have full freedom of religion and worship. Israel is home to a flourishing Christian community and welcomes its Christian friends from all over the world.'