Exhibit 4.8

                                DELTATHREE, INC.
                  2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

1.       Purposes

The purposes of this deltathree, Inc. 2004 Non-Employee Director Stock Option
Plan (the "Plan") are to enable the Company to attract, retain and motivate the
best qualified directors and to enhance a long-term mutuality of interest
between the directors and stockholders of the Company by granting them options
to purchase the Company's shares. This plan replaces the previous 1999
Directors' Compensation Plan (the "1999 Plan").

2.       Definitions

Unless the context requires otherwise, the following words as used in the Plan
shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably, and that each
encompasses the others.

         "Affiliate" shall mean a corporation which is a parent or subsidiary of
the Company, direct or indirect.

         "Award" shall mean any Option or Share awarded under the Plan.

         "Board" shall mean the Board of Directors of the Company.

         "Class A Common Stock" shall mean the Class A common shares of the
Company, par value $.001 per share.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Company" shall mean deltathree, Inc., a Delaware corporation, and any
successor thereto.

         "Eligible Director" shall mean the Chairman of the Board (so long as
such person receives no compensation for his services to the Company or any of
its subsidiaries other than as a non-executive Chairman) and any director of the
Company who is not an employee of the Company or any of its subsidiaries.

         "Fair Market Value" of a Share of Common Stock shall mean:

                           (1) If the Common Stock is listed on a national
securities exchange or traded in the over-the-counter market and sales prices
are regularly reported for the Common Stock, the closing or last price of the
Common Stock on the Composite Tape or other comparable reporting system for the
trading day immediately preceding the applicable date;

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                           (2) If the Common Stock is not traded on a national
securities exchange but is traded on the over-the-counter market, if sales
prices are not regularly reported for the Common Stock for the trading day
referred to in clause (1), and if bid and asked prices for the Common Stock are
regularly reported, the mean between the bid and the asked price for the Common
Stock at the close of trading in the over-the-counter market for the trading day
on which Common Stock was traded immediately preceding the applicable date; and

                           (3) If the Common Stock is neither listed on a
national securities exchange nor traded in the over-the-counter market, such
value as the Board, in good faith, shall determine.

         "Guidelines for Board Service" shall mean the description of duties
that each Eligible Director must perform during his or her term of service as a
member of the Board. Such Guidelines will be proposed by the Executive Committee
of the Board, and ratified by the Board prior to the annual meeting of
stockholders each year, beginning with the 2004 annual meeting of stockholders.

         "Option" shall mean the right to purchase Shares at a stated price for
a specified period of time. For purposes of the Plan, the Options are
nonstatutory stock options and are not intended to qualify under Section 422 of
the Code.

         "Share" shall mean a share of Class A Common Stock.

3.       Effective Date

The effective date of the Plan (the "Effective Date") shall be the date on which
the Plan is approved by the stockholders of the Company.

4.       Administration

         (a) Powers of the Board. This Plan shall be administered by the Board.
The Board may delegate its powers and functions hereunder to a duly appointed
committee of the Board. The Board shall have full authority to interpret this
Plan; to establish, amend and rescind rules for carrying out this Plan; to
administer this Plan; to incorporate in any option agreement such terms and
conditions, not inconsistent with this Plan, as it deems appropriate; to
construe the respective option agreements and this Plan; and to make all other
determinations and to take such steps in connection with this Plan as the Board,
in its discretion, deems necessary or desirable for administering this Plan. All
expenses incurred in the administration of the Plan, including, but not limited
to, for the engagement of any counsel, consultant or agent, shall be paid by the
Company.

         (b) Disinterested Status. Notwithstanding the foregoing, neither the
Board, any committee thereof nor any person designated pursuant to (c) below
shall take any action that would cause any director who is a "Non-Employee
Director" for purposes of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended, as then in effect or any successor provisions ("Rule
16b-3"), to cease to be a "Non-Employee Director," with regard to this Plan or


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any other stock option or other equity plan of the Company. In particular,
neither the Board nor any committee thereof shall have any discretion as to

                  (i) the selection of Eligible Directors as eligible to receive
awards pursuant to the Plan; or

                  (ii) the number of Shares subject to Options awarded pursuant
to Section 6.

         (c) Delegation. The Board may designate the Secretary of the Company,
other officers or employees of the Company or competent professional advisors to
assist the Board in the administration of this Plan, and may grant authority to
such persons to execute agreements or other documents on its behalf.

         (d) Agents and Indemnification. The Board may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of this Plan, and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent. No
member or former member of the Board or any committee thereof or any person
designated pursuant to paragraph (c) above shall be liable for any action or
determination made in good faith with respect to this Plan. To the maximum
extent permitted by applicable law and the Company's Certificate of
Incorporation and Bylaws, each member or former member of the Board or any
committee thereof or any person designated pursuant to (c) above shall be
indemnified and held harmless by the Company against any cost or expense
(including counsel fees, which shall be paid by the Company when incurred) or
liability (including any sum paid in settlement of a claim with the approval of
the Company) arising out of any act or omission to act in connection with this
Plan, unless arising out of such person's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the person
may have as a director, officer or employee or under the Certificate of
Incorporation of the Company or the Bylaws of the Company.

5.       Shares; Adjustment upon Certain Events

         (a) Shares Available. Shares to be issued under this Plan shall be made
available, at the discretion of the Board, either from authorized but unissued
Shares or from issued Shares reacquired by the Company. The aggregate number of
Shares that may be issued under this Plan shall not exceed (a) 351,216 Shares
(which represents 600,000 Shares reserved under the 1999 Plan less the amount of
Shares represented by Options previously granted under the 1999 Plan and
previously exercised and/or outstanding as of September 28, 2004) plus (b) such
additional Shares as are represented by Options previously granted under the
1999 Plan which are cancelled or expire after the date of stockholder approval
of this Plan without delivery of shares of stock by the Company, except as
provided in this Section. Shares subject to any Option granted hereunder, or
under the 1999 Plan, which expire or are terminated or canceled prior to
exercise will be available for future grants under the Plan.

         (b) No Limit on Corporate Action. The existence of this Plan and Shares
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital


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structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference shares ahead of or affecting
common shares, the dissolution or liquidation of the Company or any sale or
transfer of all or part of its assets or business, or any other corporate act or
proceeding.

         (c) Adjustments upon Certain Events. In the event of any Share dividend
or Share split, recapitalization (including, without limitation, the payment of
an extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of Shares available for Options under
Section 5(a) or subject to outstanding Options, the number of Shares underlying
any outstanding Option Awards or future Option Awards pursuant to Section 6 and
the respective prices applicable to outstanding Options shall be appropriately
adjusted.

         (d) No Adjustment If Value Received. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or other securities, and in any
case whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to the number of Shares subject to
Options underlying any outstanding Option Awards or future Option Awards
pursuant to Section 6.

6.       Option Awards

          (a) Initial Option Awards. Each individual who becomes an Eligible
Director after the Effective Date shall be automatically granted an Option to
purchase ten thousand (10,000) shares of Common Stock ("Initial Option Award")
on the date such Eligible Director joins the Board.

         (b) Subsequent Option Awards. On the first business day after each
annual meeting of stockholders of the Company occurring during the term of the
Plan commencing with the annual meeting of stockholders in 2004, each Eligible
Director who meets the Guidelines for Board Service and who continues to be an
Eligible Director following such annual meeting shall automatically be granted
an Option to purchase ten thousand (10,000) shares of Common Stock (a
"Subsequent Option Award"); provided that no Subsequent Option Award shall be
made to any Eligible Director who has not served as a director of the Company,
as of the time of such annual meeting, for at least six (6) months.

         (c) Committee Chairman Awards.

                  (i)      Each Eligible Director who is appointed as chairman
                           of a standing committee of the Board after the
                           Effective Date (and has not served as the chairman of
                           such committee immediately prior to the appointment)
                           shall be automatically granted an Option to purchase
                           ten thousand (10,000) shares of Common Stock
                           ("Initial Committee Chairman Award") on the date of
                           such appointment.


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                  (ii)     Each Eligible Director who serves as a chairman of
                           the full Board or of a standing committee of the
                           Board other than the audit committee, and who meets
                           the Guidelines for Board Service, immediately
                           following each annual meeting of the Company's
                           stockholders, commencing with the annual meeting of
                           the Company's stockholders in 2004, shall be granted
                           an Option to purchase an additional ten thousand
                           (10,000) shares of Common Stock (a "Committee
                           Chairman Award"); provided that: (1) no Committee
                           Chairman Award shall be made to any Eligible Director
                           who has not served as a director of the Company, as
                           of the time of such annual meeting, for at least six
                           (6) months, and (2) no Committee Chairman Award shall
                           be made to any Eligible Director who has received a
                           Committee Chairman award for such service on the same
                           committee within the past six (6) months. Each such
                           Committee Chairman Award shall be made on the first
                           business day after each annual stockholders' meeting
                           in question.

         (d) Audit Committee Service Awards.

                  (i)      Each Eligible Director who is appointed as a member
                           of the audit committee of the Board after the
                           Effective Date (and has not served as a member of the
                           audit committee immediately prior to the appointment)
                           shall be automatically granted an Option to purchase
                           ten thousand (10,000) shares of Common Stock
                           ("Initial Audit Committee Award") on the date of such
                           appointment.

                  (ii)     Each Eligible Director who serves as a member of the
                           audit committee of the Board, and who meets the
                           Guidelines for Board Service, immediately following
                           each annual meeting of the Company's stockholders,
                           commencing with the annual meeting of the Company's
                           stockholders in 2004, shall be granted an Option to
                           purchase an additional ten thousand (10,000) shares
                           of Common Stock (an "Audit Committee Service Award");
                           provided that: (1) no Audit Committee Service Award
                           shall be made to any Eligible Director who has not
                           served as a director of the Company, as of the time
                           of such annual meeting, for at least six (6) months,
                           and (2) no Audit Committee Award shall be made to any
                           Eligible Director who has received an Audit Committee
                           award for such service within the past six (6)
                           months. In addition, the chairman of the audit
                           committee of the Board shall be granted an additional
                           Option to purchase five thousand (5,000) shares of
                           Common Stock (an "Audit Committee Chairman Award").
                           Each such Audit Committee Service Award and Audit
                           Committee Chairman Award shall be made on the first
                           business day after each annual stockholders' meeting
                           in question.

         (e) Annual Limitation. Notwithstanding the foregoing, an Eligible
Director shall receive a maximum of Options to purchase thirty thousand (30,000)
shares of Common Stock during any single calendar year.


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<PAGE>

         (f) Option Agreement. Options shall be evidenced by a written or
electronic option agreement embodying the terms of this Section 6.

         (g) Exercise Price. The exercise price per share of Common Stock of
each Option granted pursuant to this Plan shall be equal to the Fair Market
Value per Share on the date of grant.

         (h) Option Term. If not previously exercised, each Option shall expire
on the earlier of (i) the tenth (10th) anniversary of the date of the grant
thereof and (ii) on the first anniversary of the termination of the Eligible
Director's status as a director of the Company.

         (i) Exercisability. Each Initial and Subsequent Option Award, Initial
Committee Chairman Award, Committee Chairman Option Award, Initial Audit
Committee Award, Audit Committee Service Award and Audit Committee Chairman
Award granted under this Plan shall become fully vested and exercisable on the
first anniversary of the date of grant.

         (j) Procedure for Exercise. An Eligible Director electing to exercise
one or more Options shall give written notice to the Secretary of the Company of
such election and of the number of Shares he has elected to purchase. Shares
purchased pursuant to the exercise of Options shall be paid for at the time of
exercise in cash or by delivery to the Company of unencumbered Shares owned by
the Eligible Director for at least six (6) months (or such longer period as is
required by applicable accounting standards to avoid a charge to earnings),
having a value equal to the aggregate exercise price of the Options based on the
closing price of the Shares on the date of exercise, or a combination thereof.
Upon receipt of payment, the Company shall deliver to the Eligible Director as
soon as practicable a certificate or certificates for the Shares then purchased.

         (k) Termination of Director Status. If an Eligible Director ceases to
serve as a member of the Board for any reason, (resignation, failure to stand
for reelection or failure to be reelected), any Option granted to such Eligible
Director may be exercised, to the extent it was exercisable at such date of
termination, within one year following the Eligible Director's termination of
service or prior to the expiration date of the term of the Option, whichever
period is shorter.

         (l) Change in Control. Notwithstanding anything to the contrary in the
Plan, Options granted pursuant to the Plan will become exercisable in full upon
a "change in control." For purposes of this Section, a "change in control" shall
arise if, at any time while the Eligible Director is a member of the Company's
Board of Directors any one or more of the following events occurs:

                 (i) The Company is merged, consolidated or reorganized into or
         with another corporation, or other entity and, as a result thereof,
         less than 50% of the outstanding stock or other capital interests of
         the surviving, resulting or acquiring corporation, person, or other
         entity is owned, in the aggregate, by the stockholder or stockholders
         of the Company immediately prior to such merger, consolidation or
         reorganization; or

                 (ii) The Company sells all or substantially all of its business
         or assets (or both) to any other corporation, person, or other entity,
         less than 50% of the outstanding, voting stock or other capital


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         interests of which are owned, in the aggregate, by the stockholders of
         the Company, directly or indirectly, immediately prior to or after such
         sale.

                 (iii) Any "Person" (as such term is used in Sections 13(d) and
         14(d) of the Securities Exchange Act of 1934, as amended) other than a
         Person who is an Affiliate as of the Effective Date becomes the
         "Beneficial Owner" (as defined in Rule 13d-3 under said Act), directly
         or indirectly, of securities of the Company representing 50% or more of
         the total voting power represented by the Company's then outstanding
         voting securities (excluding for this purpose the Company or its
         Affiliates or any employee benefit plan of the Company) pursuant to a
         transaction or a series of related transactions which the Board of
         Directors does not approve.

7.       Transferability of Awards

No Award shall be transferable by the Eligible Director otherwise than by will
or under the applicable laws of descent and distribution, unless such transfer
shall be (a) acceptable under Rule 16b-3 and is approved by the Board or its
authorized delegate or (b) if the Option agreement pursuant to which an Award is
made so provides, by gift or domestic relations order, to (i) the spouse,
children or grandchildren of such Eligible Director (collectively, "Family
Members"), (ii) a trust or trusts for the exclusive benefit of such Family
Members, or (iii) a partnership or limited liability company in which such
Family Members and trusts for the exclusive benefit of such Family Members are
the only partners or members, as the case may be. In addition, no Award shall be
assigned, negotiated, pledged or hypothecated in any way (whether by operation
of law or otherwise) and no Award shall be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate any Award, or in the event of any levy upon any Award by reason of
any attachment or similar process, in either case contrary to the provisions
hereof, such Award shall immediately become null and void.

8.       Rights as a Stockholder

An Eligible Director (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by his Option until
he shall have become the holder of record of such Share(s), and no adjustments
shall be made for dividends in cash or other property or distribution or other
rights in respect to any such Shares, except as otherwise specifically provided
for in this Plan.

9.       Determinations

Each determination, interpretation or other action made or taken pursuant to the
provisions of this Plan by the Board shall be final and binding for all purposes
and upon all persons, including, without limitation, the Company, the directors,
officers and other employees of the Company, the Eligible Director and the
respective heirs, executors, administrators, personal representatives and other
successors in interest of such persons.


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10.      Termination, Amendment and Modification

         (a) Termination and Amendment. This Plan shall terminate at the close
of business on September 23, 2014, unless sooner terminated by action of the
Board or stockholders of the Company, and no Awards shall be granted under this
Plan thereafter. The Board at any time or from time to time may amend this Plan
to effect (i) amendments necessary or desirable in order that this Plan and the
Awards shall conform to all applicable laws and regulations and (ii) any other
amendments deemed appropriate. Notwithstanding the foregoing, (i) the provisions
of the Plan relating to (A) the number of Shares to be granted under the Plan or
subject to any Option Award granted to any Eligible Director, (B) the timing of
any Award and (C) the material terms of any such Option Award (including,
without limitation, the time of any such grant) may not be amended without the
approval of the Company's stockholders and (ii) the Board may not effect any
amendment that would require the approval of the stockholders of the Company
under any applicable laws or the listing requirements of The Nasdaq Stock Market
(if applicable to the Company at the time such amendment is adopted or will be
effective) unless such approval is obtained.

         (b) No Effect on Existing Rights. Except as otherwise required by law,
no termination, amendment or modification of this Plan may, without the consent
of an Eligible Director or the permitted transferee of an Award, alter or impair
the rights and obligations arising under any then outstanding Award held by such
Eligible Director or the permitted transferee.

11.      Non-Exclusivity

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board to adopt such other compensatory
arrangements as it may deem desirable, including, without limitation, payments
of cash amounts related to the tax liabilities arising directly or indirectly
from the issuance of Shares in respect of an Option Award granted to an Eligible
Director hereunder.

12.      General Provisions

         (a) No Right to Serve as a Director. This Plan shall not impose any
obligations on the Company to retain any Eligible Director as a director nor
shall it impose any obligation on the part of any Eligible Director to remain as
a director of the Company, provided that each Eligible Director by accepting
each Award shall represent to the Company that it is his good faith intention to
continue to serve as a director of the Company until the next annual meeting of
stockholders and that he agrees to do so unless a change in circumstances
arises.

         (b) No Right to Particular Assets. Nothing contained in this Plan and
no action taken pursuant to this Plan shall create or be construed to create a
trust of any kind or any fiduciary relationship between the Company and any
Eligible Director, the executor, administrator or other personal representative
or designated beneficiary of such Eligible Director, or any other persons. Any
reserves that may be established by the Company in connection with this Plan
shall continue to be part of the general funds of the Company, and no individual
or entity other than the Company shall have any interest in such funds until
paid to an Eligible Director. To the extent that any Eligible Director or his
executor, administrator, or other personal representative, as the case may be,


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acquires a right to receive any payment from the Company pursuant to this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company.

         (c) Beneficiary Designation. Each Eligible Director under the Plan may
from time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in case of his death.
Each designation will revoke all prior designations by the same Eligible
Director, shall be in a form prescribed by the Company, and will be effective
only when filed by the Eligible Director in writing with the Company during his
lifetime. In the absence of any such designation, benefits remaining unpaid at
the Eligible Director's death shall be paid to or exercised by the Eligible
Director's surviving spouse, if any, or otherwise to or by his estate.

         (d) Listing of Shares and Related Matters. The Plan, the granting and
exercising of Awards thereunder, and the other obligations of the Company under
the Plan, shall be subject to all applicable federal and state laws, rules, and
regulations, and to such approvals by any regulatory or governmental agency as
may be required. If at any time the Board shall determine in its discretion that
the listing, registration or qualification of the Shares covered by this Plan
upon any national securities exchange or under any United States or non-United
States federal, state or other law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the delivery of Shares under this Plan, no Shares will be
delivered unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Board. The Company, in its discretion,
may require an Eligible Director to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules, and regulations.
The Company shall not be obligated by virtue of any provision of the Plan to
recognize the exercise of any Award or to otherwise sell or issue Shares in
violation of any such laws, rules, or regulations; and any postponement of the
exercise or settlement of any Award under this provision shall not extend the
term of such Awards, and neither the Company nor its directors or officers shall
have any obligation or liability to any person with respect to any Award (or
Shares issuable thereunder) that shall lapse because of such postponement.

         (e) Issuance of Stock Certificates; Legends. Upon any exercise of an
Option and payment of the exercise price thereof and upon the issuance of Shares
pursuant to this Plan, a certificate or certificates for the Shares shall be
issued by the Company in the name of the person or persons exercising such
Option or receiving such Shares and shall be delivered to or upon the order of
such person or persons. Certificates for Shares issued upon exercise of an
Option or otherwise hereunder shall bear such legend or legends as the Board, in
its discretion, determines to be necessary or appropriate to prevent a violation
of, or to perfect an exemption from, the registration requirements of the
Securities Act of 1933, as amended, or to implement the provisions of any
agreements between the Company and the Eligible Director with respect to such
Shares.

         (f) Withholding Taxes. The Company shall have the right to make such
provisions as it deems necessary or appropriate to satisfy any obligations it
may have to withhold federal, state or local income or other taxes incurred by
reason of the issuance of Shares under the Plan, including requiring an Eligible


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Director to reimburse the Company for any taxes required to be withheld or
otherwise deducted and paid by the Company in respect of the issuance of Shares.

         (g) Notices. Each Eligible Director shall be responsible for furnishing
the Board with the current and proper address for the mailing of notices and
delivery of agreements and Shares. Any notices required or permitted to be given
shall be deemed given if directed to the person to whom addressed at such
address and mailed by regular United States mail, first-class and prepaid. If
any item mailed to such address is returned as undeliverable to the addressee,
mailing will be suspended until the Eligible Director furnishes the proper
address.

         (h) Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provision had not been included.

         (i) Incapacity. Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipting therefor shall be
deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Board, the Company and other parties with respect
thereto.

         (j) Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.

         (k) Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.

         (l) Governing Law. This Plan shall be construed and enforced according
to the laws of the State of New York.


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