Salam Fayyad, the Palestinian prime minister, said that the government had been unable to pay the workers on time because the money had been spent on assisting the people of Gaza.

Fayyad said $20mn had already been sent to UN agencies to help civilians left homeless after Israel's 22-day assault on the Palestinian territory.

Israel's offensive in Gaza killed at least 1300 Palestinians and destroyed thousands of homes.

Reconstruction is estimated to cost at least $2 billion.

The Palestinian Authority is seeking to lead reconstruction efforts in Gaza, which has suffered an Israeli blockade in addition to sanctions imposed by Western governments since Hamas took control of the territory in 2007.