Thousands of protesters rallied in Tel Aviv Saturday demanding an extension of compulsory military or community service to all Israelis, including Arabs and ultra-Orthodox Jews, who are currently exempt.

Police estimated that "at least 10,000" took part.

Carrying placards reading "One people, one draft" the demonstrators packed into a square in front of the Tel Aviv Museum of Art.

Police spokesman Micky Rosenfeld told AFP the assembly was orderly and no incidents were reported.

The universal draft issue, which has raised passions between partners in Prime Minister Benjamin Netanyahu's coalition government, is to be debated by his Likud party on Sunday ahead of the weekly cabinet meeting.

Deputy Prime Minister Shaul Mofaz, leader of the centrist Kadima party, Likud's main coalition partner, had threatened to resign if the exemptions stood, but meeting Netanyahu on Thursday there were signs that a compromise could be in the works.

Defence Minister Ehud Barak, who has been seeking to broker a deal, issued a statement on Saturday welcoming "progress in the contacts" between the two and praised their "display of responsibility."

Military service is compulsory for most Israelis over the age of 18, with men serving three years and women two.

Ultra-Orthodox Jews and Arab Israelis are excluded under the so-called Tal Law, passed in 2002, but ruled unconstitutional in February by Israel's Supreme Court which ordered that it must become void by August 1.

Ultra-Orthodox political parties oppose conscription for their community, while the Yisrael Beitenu party of Foreign Minister Avigdor Lieberman supports a universal draft.

Supporters of sending everybody either into the army or to work in hospitals or perform other forms of community service fear that Mofaz may be prepared to accept a new form of the Tal Law in a compromise with Netanyahu, who wants to avoid alienating supporters in the Ultra-orthodox camp.

Mofaz himself conceded that some exemptions would remain.

"The Ultra-orthodox community will serve in the army more," he told commercial Channel 2 television "The percentage of Ultra-orthodox serving will increase three or fourfold."

Israeli media said that when Mofaz visited the demonstration he was booed by protesters and a member of Kadima, former armed forces chief Dan Halutz, announced that he was quitting the party, dismissing attempts to find a substitute for the Tal Law as "games."