A battle lasting more than a quarter of a century over the Western Wall, the religious site revered by Jews all over the world, has resulted in a historic deal to create a space where men and women are permitted to pray together in equality.

On Sunday, the Israeli government approved the creation of a permanent and official separate area for mixed gender praying at the site in Jerusalem’s Old City. Liberal and reform Jews hailed the move as a victory for Jews everywhere.

Women of the Wall has campaigned for equal prayer rights at the Western Wall for the past 27 years, holding monthly protests in the plaza in front of the wall’s ancient golden stones. The gatherings frequently ended in physical tussles and arrests.

The women’s demands were anathema to Israel’s ultra-Orthodox religious establishment, which manages the site. The rules governing worship – set by the Western Wall rabbi, Shmuel Rabinowitz – forbade men and women from praying together. A small section of the wall is sectioned off for women.



Women of the Wall also demanded an end to ultra-orthodox bans on women praying aloud, reading from the Torah and wearing traditional prayer shawls, known as tallit.



Thousands of Jews pray every day at the site, the last remnant of the retaining wall of the Temple Mount, pushing scraps of paper bearing handwritten prayers into the cracks between the ancient stones. The site also attracts thousands of tourists and international dignitaries, with Pope Francis, Barack Obama and Madonna among global figures who have prayed at the wall.



The new section for non-Orthodox mixed gender prayer will double the size and make permanent an area designated under a temporary compromise reached in 2013 after Israeli prime minister Binyamin Netanyahu ordered a solution to be found to the dispute. The expanded area, costing £6m, will accommodate 1,200 worshippers and be officially registered in Israel’s Law of Holy Sites. It will be administered by government officials.



The Israeli cabinet approved the plan without a formal vote. Ultra-Orthodox cabinet members criticised the move, with interior minister Aryeh Deri saying: “For all the years of its existence, the state of Israel has conducted itself based on traditional Judaism.”



Women of the Wall wearing prayer shawls sing as they walk towards the women’s section of the Western Wall. Photograph: Jim Hollander/EPA

The Israel Religious Action Centre and the Israel Movement for Reform and Progressive Judaism hailed Sunday’s agreement as historic. “For decades, Israel has given full religious authority at the Kotel [the Western Wall] to Orthodox and ultra-Orthodox Judaism. That is about to change,” said Rabbis Noa Sattah and Gilad Kariv in a joint statement.



They added: “This will put an end to the embarrassing spectacle of male and female soldiers and officials being segregated at government and military events, and to situations where the Kotel’s Orthodox rabbi refuses to let women light menorahs or female soldiers to sing our national anthem, Hatikvah, in public.



“This landmark decision gives expression to a fundamental truth: there is more than one way to be Jewish. There is more than one way to pray. There is more than one way to connect to Jewish traditions and identity.”

Women of the Wall spokeswoman Shira Pruce said the decision was a “revolution for women and Jewish pluralism in Israel”.



“By approving this plan, the state acknowledges women’s full equality and autonomy at the Kotel and the imperative of freedom of choice in Judaism in Israel,” she said.

Rabbi Danny Rich, chief executive of Liberal Judaism, the sister movement of Reform Judaism in Israel, said: “This is a landmark decision for Jews across the globe. It recognises that Judaism is an inclusive religion with a variety of different but valid expressions.

“Equality of gender, ethnicity and sexual orientation are central to Liberal Judaism and now at last liberal Jews can celebrate a Judaism in keeping with the modern world at our most holy site.”

The Western Wall forms part of a huge compound in the Old City, known to Jews as the Temple Mount and to Muslims as Haram ash-Sharif. It is the third holiest place in Islam after Mecca and Medina, and the site of the Dome of the Rock and the Al Aqsa mosque.

The Women of the Wall protests attracted global attention three years ago when the US comedian Sarah Silverman tweeted in response to the arrests of her sister, Susan, and niece, Hallel: “So proud of my amazing sister and niece for their ballsout civil disobedience. Ur the tits #womenofthewall.”