JERUSALEM - The Israeli government has suspended its decision to review and possibly cancel a tender won by the MTS group to build a light rail system in Tel Aviv, group leader Africa Israel Investments Ltd said on Monday.

Under a deal struck between the two sides, MTS will provide the government in the near future with proof it can secure funding for the project, said Africa Israel, which has a 20 percent stake in the project.

The government, which is providing part of the funding, told MTS earlier in November it would hold a hearing by mid-December to decide whether to cancel the tender for the 10 billion shekel ($2.6 billion) project.

The government backtracked, however, after Africa Israel said it remained committed to securing funding for the project and asked for a series of meetings with government representatives to set a deadline for finalising financing details.

MTS chose Bank Leumi in November 2007 to lead a consortium of Israeli banks that would provide 3 billion shekels for the project.

Under the tender won by MTS, the group will complete the first stage of the project by 2014. It includes a 23 km line comprising 33 stations, part of which will be underground.

MTS also includes German engineering firm Siemens, Chinese infrastructure company CCECC, Portuguese firm Da Costa Soares, Dutch transport company HTM, and Israel's Egged bus cooperative. (Reporting by Joseph Nasr, Editing by Simon Jessop)