The idea for Israeli author Alon Hilu's latest novel, "The House of Dajani," came to him one day in a Tel Aviv cafe when he began mentally stripping the city to its roots.

Where he ended was with an Arab boy in the 1890s, at his family farm near what would become the Jewish metropolis, hallucinating about a future in which an army invades and builds skyscrapers over the land.

The novel based on Hilu's ruminations has now embroiled him in an intense discussion of Israeli letters and the identity of the Jewish state. Critics have labeled the book anti-Semitic, lambasted what they call its loose use of historical details and branded Hilu's unflattering portrayal of early Zionist immigrants as an effort to undermine the state. Admirers awarded the book Israel's richest literary prize, only to have their decision reversed over conflict-of-interest allegations.

Hilu, who is Jewish, said he felt that blunter talk about the country's founding, far from weakening Israel, would make it stronger by advancing reconciliation with the Palestinians.

The first immigrants "came from Europe with an attitude," Hilu, 37, said in an interview at his apartment north of Tel Aviv. "It was kind of a typical meeting between colonialists and natives. There are aspects of colonialism in Zionism. You can't deny that."

The novel's plot centers on the relationship between the local Dajani family and Haim Margaliot Kalvarisky, a real-life figure who in 1895 moved from Europe to what was then Palestine. A member of Brit Shalom, an early Zionist group that looked for ways for Jews and Arabs to coexist, Kalvarisky was also an agronomist deeply involved in efforts to acquire land. In the book, he is portrayed as an adulterous schemer who ingratiates himself into the Dajani clan, befriends the prophetic son, Salah, and has an affair with the family matriarch while persuading her to hand over the farm.

Reviewers praised the novel's style and its structure -- built around the intertwined diaries of Kalvarisky and Salah -- and hailed Hilu as a rising literary star.

Hilu is unsparing in his treatment of the birth of the Jewish state, from the book's locator map -- the landscape that is now Tel Aviv is rendered with the Arab names and locations from that era -- to his portrayal of iconic Israeli figures. Characters resembling national founders, including David Ben-Gurion and Moshe Dayan, are described as "warmongers dancing on blood." Naftali Herz Imber, composer of the Israeli national anthem, is portrayed as an itinerant peddler of verse who "dies in New York in sickness and drunkenness."

An opening quote from the Koran sets the tone: "We destroyed them and their people. . . . So those are their houses fallen down because they were unjust."

The backlash, while deferential to Hilu's right to publish what he wants, reflects the mood of a public that has become increasingly impatient with criticism of the country. Prime Minister Binyamin Netanyahu has argued that -- counter to Hilu's vision -- reconciliation will come when Palestinians stop regarding Jews as interlopers and acknowledge Israel as the rightful Jewish homeland. Members of his government have advocated measures that would require Israel's Arab citizens to take oaths of loyalty to the Jewish state and prohibit them from commemorating Israel's independence as the "naqba," or the disaster.

"Self-criticism is okay, but sometimes it is beyond the redlines," said Ben-Dror Yemini, a columnist for the Maariv newspaper whose articles helped trigger a campaign against the book after it was awarded the coveted Sapir Prize. "When Jews or Zionists are depicted in this way, it is going from criticism to delegitimization and demonizing the whole idea of the Jewish state."

The Legal Forum for the Land of Israel, the group that challenged the award, said its objections were unrelated to the book's content. Rather, the group alleged that the head of the award panel had a conflict of interest because his niece was Hilu's editor -- a fact not noted on required disclosure forms. (The prize, amounting to more than $35,000, is funded by the Israeli state lottery, and the threat of litigation over the use of public funds prompted the lottery's governing agency to retract the award from Hilu, along with smaller awards to the four other finalists.)

Still, the book's plot is hardly aligned with the political views of the legal forum, which was founded to oppose the removal of Jewish settlers from the Gaza Strip several years ago.

Nachi Eyal, founder of the forum, said the group was targeting left-leaning organizations that he thinks existing public-interest institutions will not challenge. He said the Sapir Prize board, chaired by politician and writer Yossi Sarid, is one of many cultural and academic groups controlled by Israel's liberal elite.

"We want to keep Israel a Jewish state, a Zionist state and a good state," Eyal said.

"We don't give prizes to agendas or for authors. We give prizes to books," said Sarid, a former parliament member from the liberal Meretz party. He has acknowledged publicly that it was a mistake not to disclose his niece's involvement in the book but said it did not influence his choice.

The seven-person award panel has been let go by the lottery agency, which is deciding whether to assemble another group of judges or scrap the competition for this year. Hilu and the other finalists have withdrawn their works from consideration.

In his first television interview after the prize was announced, Hilu, an Israeli native and lawyer by trade, said it was probably a mistake to focus on how his book connected the naqba to the first Zionists.

But he said he also felt that a country such as Israel, with a rich literary tradition, would not read a novel like a history text or put an author through "an ordeal" for exploring ideas. Neither, he said, did he think the country was closed to continuing debate over the nature of Zionism.

"They always tell us the same. Tel Aviv was founded on sand. The Arabs ran away, and there was nothing in the area," Hilu said, a light sea breeze blowing across the balcony in a town named after Zionist founder Theodore Herzl. "What did I do? Wrote a book that I knew was going to be controversial."