The Israeli government has decided to transfer $100 million in tax revenues to the Palestinian Authority.
Israel's cabinet voted Sunday to transfer the funds, earmarked as "humanitarian aid," to the Palestinian Authority headed by Palestinian President Mahmoud Abbas.
The move is intended to send Palestinian tax and customs revenues collected by Israel to the Palestinians and bypass the Palestinian government headed by the militant Hamas movement.
The transfer was agreed to late Saturday at the first official meeting between Mr. Abbas and Israeli Prime Minister Ehud Olmert since Mr. Olmert formed a government in May.
Reports from Israel say Mr. Olmert told his cabinet today that he is considering releasing Palestinian prisoners in the coming days.
Until now, Israel has said it would only release Palestinian prisoners once Palestinian militants release an Israeli soldier, Corporal Gilad Shalit, abducted in June.
Israel withheld the Palestinian funds after Hamas took control of the Palestinian government earlier this year.
Israel refuses to deal with the Hamas cabinet because the militant group does not recognize Israel and has not renounced violence.
Mr. Olmert also told his cabinet today that he and Mr. Abbas will meet again in a bid to re-launch the stalled peace process.
The Israeli leader also agreed to remove some checkpoints in the West Bank.
Some information for this report was provided by AFP, AP and Reuters.