SecProbe.io

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Mail Stop 3561
							September 8, 2005

Mr. Emanuel Avner
Chief Financial Officer
Blue Square-Israel LTD.
2 Amal Street
Rosh Ha`ayin 48092, Israel

		RE:	Blue Square-Israel LTD.
			Form 20-F for Fiscal Year Ended December 31, 2004
			Filed June 30, 2005
			File No. 333-05024

Dear Mr. Avner:

	We have reviewed your filing and have the following comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents.  Where indicated, we think you should revise your
disclosures in response to these comments.  If you disagree, we
will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary.  Please be as detailed as necessary in
your
explanation.  In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may or may not raise additional
comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 20-F for Fiscal Year Ended December 31, 2004

Item 5. Operating and Financial Review and Prospects, page 31

Year Ended December 31, 2004 Compared with Year Ended December 31,
2003, page 33

1. Please revise to discuss in more detail the significant changes
in
the line items captioned "[f]inancial income (expenses), net" and
"[o]ther expenses, net."  For example, based on note 15.g. to the
financial statements, it appears that financial expenses increased
not only due to increased debt levels, but also due to changes in
purchasing power gains and losses and changes in the value of
marketable securities and short-term deposits.  Also clarify how
dividend payments made during the year impacted financial income
(expenses), net.  Moreover, with respect to significant other
expense
items, such as the NIS 63.9 charge in 2003 related to your
employee
agreement, we believe the nature of such charges should be
discussed
in detail in MD&A, including an explanation of why you believe the
charge to be non-recurring in nature.  Refer to Item 5.A. of Form
20-
F.

Year Ended December 31, 2003 Compared with Year Ended December 31,
2002, page 35

2. Please disclose how you calculate the change in comparable
store
sales from period to period, including how you treat stores that
were
closed, renovated, or relocated during the period.

Liquidity and Capital Resources, page 43

3. You state that your increase in cash generated by operations in
fiscal 2004 was primarily the result of an advance payment of NIS
80
million made by credit card companies in fiscal 2004.  Based on
review of your statement of cash flows it also appears that your
increase in cash generated by operations in fiscal 2004 was
significantly impacted by your NIS 114 million increase in trade
payables and other accounts payable.  Please revise to disclose
all
working capital changes that materially affect your liquidity
along
with the reasons underlying the working capital changes.

4. Please revise your tabular disclosure of contractual
obligations
to include estimated interest payments on your debt and planned
funding of your severance pay obligations.  Since the table is
aimed
at increasing transparency of cash flows, we believe these
payments
should be included in the table.  A footnote to the table should
provide appropriate disclosure regarding how you estimated the
interest payments.  If you choose not to include these payments, a
footnote to the table should clearly identify the excluded item(s)
and provide any additional information that is material to an
understanding of your cash requirements.  Refer to Item 5.F. of
Form
20-F and footnote 46 to SEC Release No. 33-8350.

Item 15. Controls and Procedures, page 111

5. We note your disclosure that there can be no absolute assurance
that your disclosure controls and procedures will detect or
uncover
all failures.  Please either remove this disclosure, or revise
your
disclosure to clarify that your disclosure controls and procedures
are designed to provide reasonable assurance of achieving the
desired
control objectives.  Also revise your conclusion regarding
effectiveness to reflect, if true, that the disclosure controls
and
procedures are effective at the reasonable assurance level.  If
your
disclosure controls and procedures are not effective at the
reasonable assurance level, please revise your disclosure to state
this.  Refer to Part II.F.4 of Final Rule Release 33-8238 for
guidance.

6. Please revise your disclosures regarding your principal
executive
and financial officers` conclusion as to the effectiveness of your
disclosure controls and procedures to ensure it encompasses the
entire definition of disclosure controls and procedures in
Exchange
Act Rules 13a-15(e) and 15d-15(e).  Your current disclosure does
not
achieve this objective.  Also confirm to us that your disclosures
regarding the effectiveness of your disclosure controls and
procedures are still accurate considering the entire definition of
disclosure controls and procedures, or otherwise revise
accordingly.

Item 17. Financial Statements, page F-1

Notes to Consolidated Financial Statements, page F-9

Note 2.  Significant Accounting Policies, page F-10

7. Please disclose your method of accounting for costs associated
with store closures, as it appears that you have had a significant
number of closures during the periods presented.  Please ensure
the
disclosure addresses both the timing of recognition as well as the
measurement of the related lease/contract termination costs and
employee termination benefits.  Also revise your United States
GAAP
disclosures, as applicable, to discuss and reconcile any
differences
between United States and Israeli GAAP in accounting for store
closure costs.

8. Please disclose your method of accounting for joint advertising
arrangements with your suppliers.  Ensure the disclosure addresses
both the timing of recognition and statements of operations
classification of amounts received pursuant to these arrangements.
Also revise your United States GAAP disclosures in Note 18, as
applicable, to address any timing and/or classification
differences
between United States and Israeli GAAP with respect to your
accounting for these arrangements.  Refer to EITF 02-16.

9. Please disclose the terms of and how you account for your "Buy
&
Bonus" and "Mega" frequent-buyer incentive programs.  Ensure the
disclosure addresses both the timing of recognition and statements
of
operations classification of amounts paid pursuant to these
arrangements.  Also revise your United States GAAP disclosures in
Note 18, as applicable, to address any timing and/or
classification
differences between United States and Israeli GAAP with respect to
your accounting for these arrangements.  Refer to EITFs 00-22 and
01-
9, as applicable.

Note 2 (m). Revenue Recognition, page F-15

10. Please disclose your method of accounting for gift certificate
sales and redemptions.  Also revise your United States GAAP
disclosures in Note 18, as applicable, to address any differences
between United States and Israeli GAAP with respect to your
recognition of revenues for gift certificates.

Note 3 (b).  Investee Companies - Proportionally Consolidated
Companies, page F-18

11. Please revise to also disclose the following amounts
proportionally consolidated:  net income and cash flows from
operating, financing, and investing activities.  Refer to Item
17(c)(2)(vii) of Form 20-F and Rule 1-02(bb) of Regulation S-X.

Note 15 (h). Other expenses, net, page F-38

12. Please clarify for us the terms of the employee agreement you
discuss in footnote (3) to the table.  Also clarify for us your
accounting for this agreement under both Israeli and United States
GAAP.   Ensure we understand the basis for your accounting under
United States GAAP and why there is no difference in the
accounting
under United States versus Israeli GAAP.

Note 18.  Effect of Material Difference Between Generally Accepted
Accounting Principles in Israel and in the U.S.A., page F-41

Note 18 (a) (12). Classification of Certain Expenses, page F-44

13. Given the significance of the classification differences,
please
revise to disclose the nature and amount of each item which is
included in non-operating expenses under Israeli GAAP, but would
be
included in operating expenses pursuant to United States GAAP.

Note 18 (b) (1). Consolidated Statements of Operations, page F-47

14. Please tell us how you determined that the weighted average
number of shares outstanding was the same for both the basic and
diluted earnings per share computations.  In this regard, since
the
conversion feature of your convertible debentures was in the money
during fiscal 2004, we would expect weighted average shares
outstanding for purposes of the diluted calculation to include
assumed conversion of these debentures, after application of the
if-
converted method.  Please advise.

15. Please revise this reconciliation, as well as your balance
sheet/shareholders` equity reconciliation to present adjustments
for
fixed assets on a gross basis with separate disclosure of the
amounts
related to accumulated depreciation.

	Please respond to these comments within 10 business days or
tell
us when you will provide us with a response.  Please furnish a
letter
that keys your responses to our comments and provides any
requested
information.  Please understand that we may have additional
comments
after reviewing your responses to our comments.  Please file your
response letter on EDGAR as a correspondence file.

	 We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

       In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

		In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.

	If you have any questions regarding these comments, please
direct them to Adam Phippen, Staff Accountant, at (202) 551-3336.
In
his absence, direct your questions to Robyn Manuel at (202) 551-
3823.
Any other questions may be directed to me at (202) 551-3843.

								Sincerely,

								George F. Ohsiek, Jr.
								Branch Chief

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Mr. Emanuel Avner
Blue Square-Israel LTD.
September 8, 2005
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