The problem may ultimately be decided by the Constitutional Court.
The arguments began when the Social Democrat-Social Liberal coalition government tried to overturn the current practice of restoring property rights, on the grounds that the cost of resettling tenants was too great and that it should be possible to offer financial compensation instead.
President Valdas Adamkus vetoed the proposed amendment to the law, insisting the previous practice must be kept.
"The submitted amendments cause certain doubts as to their compliance with the constitution of the Republic of Lithuania," Adamkus said in his veto decree.
The parliamentary majority overruled the president's veto and blocked the opposition's move to submit the amendments to the Constitutional Court.
Parliament Chairman Arturas Paulauskas, who leads the Social Liberals and is a former prosecutor general, went on Lithuanian television on Jan. 20 to say that the constitution allows compensation of owners with money in exceptional cases when the "interests of the state require it."
He concluded, "Compensation with money is compensation, too."
Speaking before the Jan. 22 parliamentary vote on whether to send the amendment to the court, Arturas Vazbys, a MP from the Modern Christian Democratic Union, expressed dismay at the government's position.
"We will vote to send it to the Constitutional Court and if it doesn't pass by a majority, then the opposition will gather enough signatures to send it to the court anyway," he said.
If it does get sent to the Constitutional Court the court's busy schedule means the case would not be heard for at least 12 months, according to Constitutional Court Judge Stasys Staciokas.
After a meeting with the opposition on Jan. 23 Prime Minister Algirdas Brazauskas rather sensationally announced that contrary to the position of his party's parliamentary faction he favored continuing to return real estate to its pre-Soviet owners and their heirs.
Brazauskas did promise to the rightists that he would try to speed up the process of the Constitutional Court decision but was vague on the government's position.
The property restitution issue was thought to have been settled in the years immediately following the restoration of independence.
According to Lithuanian law tenants evicted by the owner could only leave the property after the state had provided alternative housing.
But while hundreds of pre-Soviet owners and their heirs have recovered their ownership rights they have often not regained access to property because the state doesn't have to found alternative housing for the existing occupants.
To complicate matters further some flats were quasi-privatized and perhaps sold a number of times during Soviet times, meaning that the current occupants have actually paid for their flats.
Such people are concerned that they receive adequate compensation from the state.
By 2001 only 5,115 of the 9,000 people who had claimed back property had actually had it returned to them. Of the 5,115 who in theory had recovered their property 1,865 received houses occupied by tenants, said Birute Stolyte, spokeswoman of the Lithuanian statistics department.
In 2001 the amount needed by the state to compensate owners who asked for it was 172.3 million litas ($43 million) but only 38.8 million litas were actually paid out, according to the Finance Ministry.
The amount needed to resettle tenants was 143.3 million litas but only 50.2 million litas was actually paid out for this purpose.
Observers emphasize that the center-left government stands to gain from limiting owners' rights to reclaim their property on the eve of the forthcoming presidential campaign. There are many more voters who were placed in apartments during Soviet times than there are pre-Soviet owners and their descendants.
The current ruling center-left majority says that most former owners acquired flats or houses during the Soviet period and have somewhere to live now so it would be more logical to pay monetary compensation to pre-Soviet owners or their heirs.
The center-left coalition has decided to allow people who live in property whose ownership is contested to purchase their premises from the state, a move that was previously forbidden. They say these measures will alleviate the concern some tenants have as to whether or not they will be evicted.
"Since independence, many people have had a chance to privatize their apartments, but there are about 7,000 citizens who could not, and they are in a difficult position," explained Social Democratic MP Vytenis Andriukaitis. He said that it was impossible for the Lithuanian state to live up to its promise to find those 7,000 or so people new accommodation.
According to the law only Lithuanian citizens are entitled to claim property under the restitution process. Lithuania's second city Kaunas, which between the wars was the country's capital, is the one where the process is most at issue because in other cities the proportion of ethnically Lithuanian property owners was low.
A large number of Vilniusites were Jews killed during the Holocaust, and a vast majority of Poles moved to Poland after World War II. Similarly, in Klaipeda, before 1945 most real estate belonged to ethnic Germans, almost all of whom moved to Germany after World War II.
Only a few émigrés who have got back Lithuanian citizenship have bothered to retrieve lost property or inheritances even though dual citizenship is allowed.
In Siauliai, nearly 80 percent of the city was destroyed by Soviet bombardment, and Panevezys consists mostly of Soviet built houses.
The real estate market boomed in Kaunas in the 1920s and 1930s, and a large portion of the former real estate owners survived the Soviet concentration camps or Siberian deportations, returning to Lithuania in the late 1950s.