Meanwhile the Knesset announced Monday that it will hold a special session on the rash of protests sweeping the nation despite being on summer recess.
Netanyahu at the start of the regular weekly Cabinet meeting on Sunday morning announced the formation of a 15-member panel to review the demands, and to submit proposals in the next month for social and economic reform.
The previous night, an estimated 300,000 demonstrators protesting the rising costs of living had gathered in Tel Aviv, with another 20,000 protesting in Jerusalem and several thousands more in cities throughout the country.
It was the third such demonstration — and the largest — since the protests began more than three weeks ago. Protesters chanted, among other slogans, "The people demand social justice" and "An entire generation demands a future."
Protest leaders have already decried the committee, saying that they are looking for direct dialogue with Netanyahu. The committee will be headed by Professor Manuel Trachtenberg, chairman of the National Economic Council, and made up of Cabinet ministers, observers and economic experts.
Announcing the formation of the committee, Netanyahu said, "We are aware of the fact that working couples with children are finding it difficult to finish the month. We recognize the plight of students who cannot pay their rent. We are aware of the distress of the residents of neighborhoods, of discharged soldiers and others. We want to provide genuine solutions.
The Israeli leader acknowledged that the committee's proposals will not please everybody, but he pledged, "We will listen to everyone. We will speak with everyone. We will hold a genuine dialogue, not pressured and perfunctory, but we will really listen both to the distress and to the proposals for solutions. In the end we will consider practical solutions. Practical solutions require choices. They also require balance."
On Saturday night, Israeli musicians Shlomo Artzi, Rita and Yehudit Ravitz entertained the demonstrators, who also heard speeches from Daphne Leef, founder of the movement, and Rabbi Benny Lau, founder of the Beit Morasha social justice institute.
"If I could, I would show you how people have demanded social justice since the origin of Judaism," Lau told the crowd.
The special session of the Knesset, scheduled for next week, was announced Monday, after 50 opposition lawmakers signed a petition calling for the session titled "Netanyahu's tax government is disconnected from the people and ignoring the public protest." Only 25 signatures were necessary to call the meeting during a recess.
The signatures were collected by the Kadima and National Union parties.
On Monday, hundreds of senior citizens protested in Tel Aviv against the high cost of living, calling for lower medicine costs, a cancellation of the value-added tax on basic necessities and safeguards on the value of their pensions.
In the United States, Israelis living here are pitching tents in public spaces, taking up the social justice protests crisscrossing Israel.
Small tent cities have sprung up in New York's Time Square, across the street from the White House and at a park in Los Angeles, Ynet reported.
About 200 ex-Israelis and supporters of Israel's housing protesters demonstrated in Los Angeles' Woodley Park Sunday, in a protest organized on Facebook, according to Ynet. The Israeli protesters said they would return to the country of their birth if the cost of living was less and the financial pressures were not as great.