The Interim Israeli Prime Minister, Ehud Olmert, has agreed to wait until after Hamas assumes control of the Palestinian parliament before ordering any tough new restrictions on the Palestinians.
Officials said Mr Olmert put off until Sunday's cabinet meeting a proposed ban on Palestinian workers and funding after The United States and the European Union cautioned against taking steps that might make life more difficult for Palestinians.
A spokesman for Israel's Foreign Ministry said Israel was now in 'watch and wait mode' to see what positions Hamas would take on Saturday after the swearing-in of a parliament dominated by the Islamic militant group, whose charter calls for the destruction of the Jewish state.
The Israeli Defence Ministry has recommended imposing further restrictions on the movement of Palestinians. It says security should be tightened at its crossing points into the Gaza Strip.
Another proposal is to withhold the millions of dollars in taxes that Israel collects for the Palestinians.
Israel has already indicated that it will not deal with a Hamas-led administration unless the organisation gives up its armed struggle, recognises the state of Israel and abides by previous peace agreements.
