Israeli Prime Minister Benjamin Netanyahu and Finance Minister Israel Katz said in a statement on Sunday that the stipends, previously scheduled to end by next week, will be extended until the middle of August, Xinhua news agency reported.
Eligibility for the grants to people over 67 who have not yet returned to work will also be extended, Netanyahu and Katz said.
"At the end of this period, the extension of eligibility will be re-evaluated in light of employment data in the economy," the statement read.
The decision, coming in the wake of an economic crisis caused by the COVID-19 outbreak, was made in an economic consultation with Bank of Israel Governor Amir Yaron and National Economic Council head Avi Simhon.
Last week, Labour Minister Itzik Shmuli warned that without extending the eligibility period for unemployment benefits to people on unpaid leave, some 262,000 Israelis would be left without a job or a stipend.
In April, when the country was under lockdown, the government's Employment Service said some 1.14 million people, or about 12 percent of the entire Israeli population, were unemployed on unpaid leave.