Abu Dhabi government has said that it is prepared in principle to make exceptions to its policy requiring all of its public sector employees to live inside the emirate.

It was the first time that the government had explicitly said it would compromise on the policy, which could pressure thousands of expatriate professionals and other workers to move to Abu Dhabi from neighbouring Dubai.

Abu Dhabi, which has a population of about 2.5 million, announced last September that employees of government institutions, including state-owned firms, would lose their housing allowances if they lived outside the emirate. It gave a one-year grace period for people to move.

The policy affected many expatriates who work in Abu Dhabi but live in Dubai for lifestyle or family reasons, or because housing rents in Dubai can be cheaper.

While the government said the new rule aimed to cut traffic accidents during the one-hour commute between the cities, analysts said the policy also appeared designed to benefit Abu Dhabi's economy by absorbing a large supply of new high-end homes that is set to come on the market. Property prices in the emirate have tumbled about 50 percent since the global financial crisis hit the market several years ago.

In a statement to Reuters, however, the government said on Thursday that it was willing to make exceptions based on circumstances, though it did not describe those conditions.

"A circular was issued in September 2012 concerning the housing policy for Abu Dhabi government employees. The circular will be effective at the end of this coming September as the deadline was set a year ago to give employees enough time to resettle in Abu Dhabi," the General Secretariat of the Abu Dhabi Executive Council said.

"The circular is binding on all Abu Dhabi government employees. Nonetheless, special cases that require exception will be considered and assessed. Appropriate decisions will be made to each case separately."

Precise figures for the number of Abu Dhabi government employees living outside the emirate have not been released, but analysts have estimated it at roughly 15,000-20,000. It is not clear how many have already moved.-Reuters