Prime Minister Ariel Sharon's government had previously vowed to ignore a non-binding verdict by the International Court of Justice in July that parts of the barrier built on Palestinian land were illegal and should be torn down.

But judicial sources confirmed Friday that the country's supreme court has told the government to respond within 30 days to the ruling by the UN's top legal body which Attorney General Menachem Mazuz was warning could have "inestimably negative consequences".

Chief Justice Aharon Barak is understood to have said that a petition filed by residents against one tranche of the barrier would be "an appropriate opportunity" to compile a written assessment of the ramifications of the ICJ ruling.

Mazuz was also warning the government not to simply brush aside the ruling.

"It is hard to overestimate the negative repercussions of the decision of the International Court of Justice at The Hague for the state of Israel in various realms, including issues that go beyond the separation fence," said Mazuz in a report commissioned by Sharon.

"The decision creates a legal reality for Israel in the international arena, which could serve as an excuse and a catalyst for activity against Israel in international forums, to the point of sanctions."

In a separate report Mazuz's department recommended that the government "deploy large efforts to modify the route of the fence", taking into account the main points of the ICJ ruling "in order to reduce the tension on the international legal front."

Israeli defense officials have been reworking the route of the barrier after the Supreme Court ruled in late June that its current path violated the rights of tens of thousands of Palestinians living near Jerusalem.

In contrast to its pledge to ignore the ICJ's non-binding verdict, the government has said it will respect the Supreme Court ruling.