Israel's cabinet on Sunday approved a plan for frozen Palestinian tax funds to be held by a third-party country, and reserved the right to decide when the money will be transferred to the Palestinian Authority (PA).
Under interim peace accords, Israel's finance ministry collects tax on behalf of the Palestinians and makes monthly transfers to the PA, which has limited self rule in the occupied West Bank.
But there have been constant wrangles over the arrangement, and the Palestine Liberation Organisation (PLO) said on Sunday it wanted the money in full and would not accept conditions that prevent it from paying its staff, including in Gaza.
"Any deductions from our financial rights or any conditions imposed by Israel that prevent the PA from paying our people in the Gaza Strip are rejected by us," Hussein Al-Sheikh, secretary general of the executive committee of the PLO, said on social media platform X.
Israeli Prime Minister Benjamin Netanyahu said the cabinet decision was supported by Norway and the United States, which will be a guarantor that the framework holds.