Israel will be able to host England in their own country in March
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Uefa has lifted the suspension on home European and international games being played in Israel, though they can still only be held in Tel-Aviv.
The ban was imposed during the 34-day conflict between Israel and Hezbollah, with 1,200 people killed in Lebanon and more than 150 Israelis also killed.
The ban forced Israeli home fixtures under Uefa's jurisdiction to be played at other venues in European countries.
"Uefa has lifted the ban with immediate effect," said a Uefa statement.
It continued: "This follows the decision to relocate all matches to neutral territory made on 7 August 2006 due to the conflict in the area.
"Matches must be played in the region of Tel-Aviv only and security guarantees are required for every match.
"Uefa may reimpose a ban at any time if it considers that there has been a deterioration in the security situation."
Liverpool had to play their Champions League third-round qualifier against Israeli side Maccabi Haifa in Kiev in August because of the ban.
England are in the same Euro 2008 qualifying group as Israel, with the away game to be played on Saturday 24 March 2007.
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