Ismail Haniya, in comments to his Hamas-led government, did not disclose the source of the funds. Palestinian banks have so far refused to transfer money to the Palestinian Authority, fearing US sanctions.

"I would like to announce that the ministry of finance will begin to pay a full month's wages to those earning a monthly salary of up to 1,500 shekels ($332). The number of those employees is 40,000," Haniya said.

He also promised to pay each of the other 125,000 government workers, who earn higher salaries, an advance of 1,500 shekels.
   
Ghazi Hamad, the cabinet spokesman, said the money would come from donations and internal revenues. There would be no banking complications, he added without elaborating.

The pledged payments could total nearly $55 million. The Palestinian Authority's monthly salary bill is $120 million.

Negotiations
   
International donors have frozen payments to the government, demanding Hamas, which came to power after a January election, recognise Israel, renounce violence and accept previous interim peace deals.
   
Hamas, whose charter calls for Israel's destruction, has said negotiations with Israel would be pointless.
   

There were clashes between
Hamas and Fatah militias

In the West Bank city of Ram Allah, about 1,200 unpaid civil servants held a protest outside the prime minister's office, demanding their pay.
   
Haniya made the pledge as the clock ticked down on a 10-day ultimatum from Mahmoud Abbas, the Palestinian president, to soften its line against Israel or face a referendum on peacemaking in July. Abbas's deadline ends this weekend.

Peacemaking

Ehud Olmert, the Israeli prime minister, is expected to meet Abbas in the near future, although few believe there will be much progress on peacemaking.

Olmert has proposed a unilateral plan to remove isolated Jewish settlements in the occupied West Bank, bolster major enclaves and set frontiers if peace talks remain frozen.
   
Palestinians have condemned Olmert's blueprint as denying them a viable state they seek in the West Bank and the Gaza Strip and accuse Israel of also not carrying out commitments made in previous agreements.