Groping for a response to the blast that killed 18 people and left the US-backed peace plan for the region severely jolted, Abbas also broke contacts with Hamas and Islamic Jihad.
"Instructions have been given to Palestinian security services to pursue those who were behind the operation and to bring them to justice...The cabinet is to look into other security measures to be taken," Information Minister Nabil Amr said.
Severely embarrassed by the explosion, Abbas decided to end contacts with Hamas and the Islamic Jihad after consultations with Palestinian ministers.
"It was decided after these meetings in Gaza City that the Palestinian Authority would stop all forms of dialogue with Hamas and the Islamic Jihad for the time being. It holds them responsibile for harming the higher national interest of Palestinian people," a senior security official said.
Abbas had earlier condemned the blast, saying it "does not serve the interests of the Palestinian people".
Last night's blast, carried out by a human bomb in west Jerusalem, apart from killing 18, wounded more than 120 people.
Israel had responded to the blast by freezing all contacts with Palestinians, according to a senior government official.
As a result, Israel will not transfer control of the occupied West Bank cities of Jericho and Hebron, a move that was expected to take place this week.
The Jewish state also slapped a blanket closure across the occupied West Bank and Gaza Strip early on Wednesday, forbiding people from coming and going, Israeli military radio said.
Hamas: Blast was in retaliation
to Israel's killing of activists
But an Israeli military spokesman said the army was "considering" a blockade.
Both Hamas and Islamic Jihad have claimed responsibility for the bus bombing.
Hamas said 25-year-old Hamid Misk, a teacher from the occupied West Bank city of Hebron, detonated the explosive. A video showing Misk was later released.
The blast was in retaliation for Israel's killing of two Hamas leaders in Nablus earlier this month and an Islamic Jihad leader in Hebron last Thursday, said Hamas in a statement.
The group said Israel had violated the "hudna" or truce called by resistance groups, aimed at temporarily halting of resistance attacks.
Hamas vowed to carry out more resistance attacks if Israel continued to kill Palestinian activists.
Truce in tatters
The bus explosion came on the day Abbas was due to start two days of talks with resistance groups about the troubled truce with Israel.
The truce on anti-Israel attacks was called by Palestinian resistance groups on 29 June. In return for the ceasefire, the groups expected Israel to halt attacks against its members.
But Israel says the truce is unilateral and it is not bound by its terms. The truce then appeared at risk after a spate of attacks by Israel against resistance groups.