The rare decision on Sunday by church leaders to close the ancient holy site, a favorite among tourists and pilgrims, with the busy Easter holiday approaching put extra pressure on Israel to re-evaluate and suspend the moves.

After receiving a statement from the office of Israeli Prime Minister Benjamin Netanyahu, Roman Catholic, Greek Orthodox and Armenian clergy announced on Tuesday the church would reopen the next morning.

Before dawn on Wednesday, Wajeeh Nusseibeh, who is a charge of locking and unlocking the church, climbed a stepladder and turned the key to open its main wooden door.

"It's one of the holiest sites for our religion and we prayed very hard these last three days that things would change and it would be open for us to be able to go in," said an American pilgrim, who gave her name only as Laurie.

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An Israeli committee led by cabinet minister Tzachi Hanegbi will negotiate with church representatives to try to resolve the dispute over plans to tax commercial properties owned by the church in Jerusalem, Netanyahu's statement said.

Church leaders, in a joint statement, welcomed the dialogue.

"After the constructive intervention of the prime minister, the churches look forward to engage 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 (Judaism, Islam, and Christianity) may live and thrive together."

The Jerusalem Municipality, Netanyahu said, would suspend tax collection actions it had taken in recent weeks.

Mayor Nir Barkat has said the churches owed the city more than $180 million in property tax from their commercial holdings, adding that "houses of worship" would remain exempt.

While the review of the tax plan is underway, work on legislation that would allow Israel to expropriate land in Jerusalem that churches have sold to private real estate firms in recent years will also be suspended, Netanyahu said.

The bill's declared aim is to protect homeowners against the possibility private companies will not extend their leases of land on which their residences stand.

Churches are major landowners in Jerusalem. They say such a law would make it harder for them to find buyers for their land- sales that help to cover operating costs of their religious institutions.

REUTERS