We show that a KSVZ axion with a decay constant in the phenomenologically allowed range can be obtained in certain $E_8times E_8$ heterotic string models. These models have an enhanced symmetry locus in the moduli space, and a non-universal, Kahler m
oduli dependent Fayet-Iliopoulos term which vanishes at this locus. Close to this locus the Fayet-Iliopoulos term is small and can lead to an axion decay constant significantly lower than the string scale. In this way, the no-go arguments of Svrcek and Witten, which are based on a universal, dilaton-dependent Fayet-Iliopoulos term, can be avoided. The relevant axion originates from phases of bundle moduli which correspond to deformations away from the enhanced symmetry locus. We construct an explicit example, based on a heterotic line bundle standard model, with all the required ingredients.
