Israel has transferred $100m of tax revenue to the Palestinian Authority in an effort to support Palestinian President Mahmoud Abbas.
It had withheld the money since Hamas was elected to power in the Palestinian elections in March of last year.
The money is being paid directly to President Abbas, whose rival Fatah organisation has been engaged in a power struggle with Hamas.
The Israeli authorities have frozen a total of $600m over the past year and made clear that they would not transfer the funds to the Hamas-led Palestinian government.
A spokesperson for Israeli Prime Minister Ehud Olmert said the money would go towards 'humanitarian purposes and strengthening Palestinian president Mahmoud Abbas' presidential guard'.
The transfer, which will help to ease the serious cash-flow crisis suffered by the Palestinian Authority, was promised by Mr Olmert when he met Mr Abbas on 23 December.
Meanwhile, Israeli Defence Minister Amir Peretz has ordered that the building of a new settlement in the occupied West Bank be suspended, just weeks after approving the plan.
The announcement of a new settlement in Meskiot in the northern Jordan Valley had provoked mass international criticism and Mr Peretz has now halted the plan in order to 'examine the issue in depth'.
