The soldier will receive 82,000 shekels (roughly $17,000) as part of an arrangement reached between his lawyers and the Israeli military prosecutor, the Israeli press reported last week.
The compensation was awarded to cover legal expenses and damages. An Israeli army spokeswoman said the court "agreed to compensate him because it was convinced that he was wronged".
Yousuf Rizqa, the new PA minister of information, described the acquittal in the killing of Iman Al Hams, 13, and the compensation as "infinitely scandalous and defying logic and morality".
"In every country in this world, child killers are prosecuted and punished. In Israel, not only child killers are not punished, they are actually rewarded," Rizqa told Aljazeera.net.
He described the trial of the Druze soldier as "theatrical and absurd from the beginning to the end".
"The so-called court didn't discuss the killing itself and instead concentrated on secondary aspects of the murder, such as whether the killer misused his weapon or whether he violated firing instructions."
In the 2004 trial, the soldier was charged with misusing his weapon and seeking to obstruct an investigation, but not with murder or manslaughter.
Another Palestinian leader called the court's decisions tantamount to encouraging murder.
Israeli troops are critcised
"They are telling prospective killers that not only could they kill Palestinian children with impunity but that they actually would receive financial benefits for the murder," said Abdullah Abdullah, the outgoing director-general of the Palestinian foreign ministry and a current member of the Palestinian Legislative Council.
On 5 October, 2004, the soldier, known as Captain R, reportedly shot Iman while she was on her way to school in Rafah at the southern edge of the Gaza Strip and then proceeded to fire about 20 bullets into her body to make sure she was dead.
The shooting was documented on video by an Israeli cameraman and screened on Israel's Channel 2 television. In that video, the soldiers identified the victim as a girl about 10 years old and said she was "scared to death".
Another soldier is heard saying "our forces are attacking her", and a lookout says "one of the positions has taken her down".
In the same video, Captain R is heard saying "we operated on her. Yes, it seems she has been hit". He later stated that he "verified" the killing and added: "Anyone that moves in the zone, even if it is a 3-year-old boy, should be killed."
A military court on 15 October, 2004, cleared the soldier of any wrongdoing, ruling that there was no evidence of unethical behaviour, and "verification of the kill" was not a crime under Israeli military law.
The court ruled that there was no way to prove that the bullets that killed the child were fired from the soldier's rifle since Iman’s family refused to exhume her body, saying it had no faith in the Israeli justice system.
According to the Israeli newspaper Haaretz, the soldier stated that the shots he fired were not aimed directly at the girl's body and that he opened fire in the direction of the girl to create a deterrent. He said he thought the girl posed a serious threat.
"It is amply clear that nobody in the army or in government is bothering to find out the culprit or the truth regarding what happened"
Gideon Levy, an Israeli journalist for Haaretz who often covers Israeli army human rights violations in the West Bank and Gaza Strip, said the Captain R episode wasn't a surprise.
"First of all, we should realise that justice and the occupation can't coexist. They are an oxymoron. When one exists, the other disappears.
"Second, it is amply clear that nobody in the army or in government is bothering to find out the culprit or the truth regarding what happened," Levy told Aljazeera.net.
Since the trial, Captain R has been promoted to the rank of major and is serving as an operation officer in the Givati Infantry Brigade's Shaked battalion, Haaretz reported.
The Israeli army declined to comment on the case.