JERUSALEM â€"  Israeli archaeologists have discovered a 2,700-year-old seal that bears the inscription "Bethlehem," the Israel Antiquities Authority announced Wednesday, in what experts believe to be the oldest artifact with the name of Jesus' traditional birthplace.

The tiny clay seal's existence and age provide vivid evidence that Bethlehem was not just the name of a fabled biblical town, but also a bustling place of trade linked to the nearby city of Jerusalem, archaeologists said.

Eli Shukron, the authority's director of excavations, said the find was significant because it is the first time the name "Bethlehem" appears outside of a biblical text from that period.

Shukron said the seal, 1.5 centimeters (0.59 inches) in diameter, dates back to the period of the first biblical Jewish Temple, between the eighth and seventh century B.C., at a time when Jewish kings reigned over the ancient kingdom of Judah and 700 years before Jesus was born.

The seal was written in ancient Hebrew script from the same time. Pottery found nearby also dated back to the same period, he said.

Shmuel Achituv, an expert in ancient scripts at Israel's Ben-Gurion University who did not participate in the dig, said the discovery was the oldest reference to Bethlehem ever found outside of the Bible. Apart from the seal, the other mentions of Bethlehem, Achituv said, "are only in the Bible."

The stamp, also known as "fiscal bulla," was likely used to seal an administrative tax document, sent from Bethlehem to Jerusalem, the seat of Jewish power at the time.

It was found as archaeologists sifted through mounds of dirt they had dug up in an excavation outside Jerusalem's Old City walls.

Shukron said the first line most likely read "Beshava'at" -- or "in the seventh" -- most likely the year of the reign of a king. The second line, he said, has the crumbling letters of the word "Bethlehem." The third line carried one letter, a "ch" which Shukron said was the last letter of the Hebrew work for king, "melech."

Hebrew words often do not have vowels, which are understood from the context, making several interpretations of the same word plausible. Some of the letters are crumbled, or were wiped away. Three experts interviewed by the AP, one involved in the text and two independents, concurred the seal says Bethlehem.

There are only some 40 other existing seals of this kind from the first Jewish Temple period, said Achituv, making this a significant find, both because such seals are rare, and because this is the first to mention Bethlehem.

The dig itself has raised controversy.

It is being underwritten by an extreme-right wing Jewish organization that seeks to populate the crowded Palestinian neighborhood of Silwan with Jewish settlers, arguing that they have ancient links to the area. The dig is being undertaken in a national park in the area of Silwan, known to Jews as "the City of David."

Shukron said the seal was found some months ago, but they needed time to confirm the identity of the artifact.