Israel says they will increase pressure on Gaza's already impoverished population in an effort to force Palestinian armed groups to stop rocket attacks against southern Israel that the army has struggled to curb.
"We are left with no choice but to take these steps. I assume they will have an effect, even if not immediately," Matan Vilnai, the deputy defence minister, said a day before Barak's decision finalised the proposal.
"We are looking at a gradual disengagement from Gaza in terms of electricity supplies so they can supply electricity for themselves," he told army radio.
But the Palestinians and international human rights organisations say that any such move amounts to collective punishment of the civilian population, crammed into the narrow coastal enclave, in breach of international law.
The Carter Centre, a human rights group founded by former US president Jimmy Carter, meanwhile, urged Israel to maintain energy supplies to Gaza.
"The Carter Centre sees this proposal as the collective punishment of 1.4 million people for the actions of a few," it said before the Israeli defence minister's decision was announced.
Last month Israel declared Gaza a "hostile entity" after Hamas's bloody takeover of the territory in June, paving the way for sanctions against the territory such as cutting vital water and fuel supplies.
Already reeling from a Western freeze on direct aid after Hamas won elections in 2006, Gaza has been further isolated from the outside world since the takeover as Israel restricts all but vital humanitarian supplies.
According to Israeli and Palestinian officials, Gaza's population uses about 200 megawatts of electricity, of which 120 are provided directly from Israeli power lines, 17 are delivered from Egypt, and 65 are produced at a local Palestinian plant.
Barak's approval was the final step needed before any reduction of electrical supplies could be implemented.
Palestinian armed groups frequently fire short-range rockets into southern Israel from the Gaza Strip, attacks Israeli incursions and air strikes have failed to stop.
Israeli forces killed at least three gunmen on the Gaza border on Thursday.