The Israeli government announced today that it was ending the state telephone company's monopoly on domestic telephone and Internet service, taking a long-resisted deregulatory move that sets the stage for the company's sale to private investors later this year. Bezeq, the state-owned telephone company, will now face competition for the first time in Israel's local telephone and high-speed Internet market, just months before the government plans to divest its majority stake in the $5 billion enterprise. Unionized telephone workers protested the decision with a partial stopping of work, but the government vowed to proceed with plans to grant telephone and data transmission licenses to new wireless networks and long-established cable television operators. ''The market is now completely open,'' Communications Minister Benjamin Ben-Eliezer declared after signing a decree setting out the new rules for the industry.