Israel put the Palestinian city of Hebron on lockdown Friday and is boosting its military presence in the West Bank after two deadly Palestinian attacks on Israeli civilians in two days.
They include the stabbing death of a 13-year-old girl while she slept in her home in a Jewish settlement.
Israeli military officials say they do not know how long the lockdown of Hebron will last. They point out that 80 Palestinian attacks on Israelis since September originated in and around Hebron.
"The terror and incitement atmosphere in the Hebron area is backed by the public and local leadership, and they must feel the consequences of their murderous acts in their daily lives," Israeli Internal Security Minister Gilad Erdan said Friday.
Along with more military and police action, Prime Minister Benjamin Netanyahu ordered a cut in tax revenues Israel collects and disburses to the Palestinian Authority each month. He accuses the Palestinian leadership of laundering money so it can be transferred to the families of militants.
"The more severe the acts of terrorism, the greater the amount of funds," Netanyahu said, calling the payments an "incentive to murder."
A Palestinian official said the money is "social welfare" to Palestinian prisoners and those freed from Israeli jails, saying the authority cannot leave anyone without help.
The tough new Israeli measures came just after a suspected Palestinian gunman shot and killed an Israeli man and wounded his wife and two sons as they drove near Hebron on Friday.
Israelis are still shocked over the stabbing death Thursday of 13-year-old Hallel Yaffa Ariel, a dual U.S.-Israeli citizen.
A Palestinian teen broke into her home in a Jewish settlement near Hebron and killed her while she slept. A security guard fatally shot her attacker.
Netanyahu displayed pictures of her bloody bed and a teddy bear on Israeli television.
A distant relative of Hallel's killer was shot and killed Friday when she tried to stab an Israeli policeman outside a religious shrine in Hebron where Jews and Muslims worship.
Thirty-four Israelis have been killed along with two Americans, an Eritrean and a Sudanese in a wave of Palestinian stabbings and other attacks.
More than 200 Palestinians were killed during the attacks, or while attempting to carry them out.
The violence erupted 10 months ago when rumors swept through Palestinian areas that Israel was planning to take over an East Jerusalem religious site sacred to Jews and Muslims.
Israel strongly denied the rumors about the religious site and accuses Palestinian authorities of inciting the violence.
But young Palestinians say they are fed up with poverty, unemployment, a stalled peace process, weak leadership, and Israeli settlements on land they want as part of a future state.