Arab foreign ministers meeting in Libya have agreed to raise a fund of $500 million to support Palestinians living in Jerusalem.
The ministers, who are in the Libyan city of Sirte ahead of an Arab League summit over the weekend, hope the fund will help counter Israel's settlement drive within the Holy City.
"Yes, they have agreed," Amr Moussa, the Arab League's secretary-general, said when asked if the fund had been approved.
Final ratification will come when the decision is submitted to Arab leaders when they gather on Saturday and Sunday.
Focus on Jerusalem
The Middle East peace process is set to dominate the summit after Israel angered Palestinian and Arab leaders earlier this month when it announced plans to build 1,600 new homes for Jewish settlers in East Jerusalem.
Amr el-Kahky, Al Jazeera's correspondent reporting from Sitre, said there was a strong sense of Arab commitment towards the Palestinians.
"There are several points to be discussed at the Arab League meeting but most of them revolve around Jerusalem, even Egypt dubbed this year's summit as 'The Jerusalem Conference'," he said.
"Arab officials told us that despite all [their] differences there is a sense of responsibility towards Jerusalem and that they feel a need to come together and act quickly against what they call an Israeli Judaisation of Jerusalem."
Riyad al-Malki, the Palestinian foreign minister, said: "It is a modest amount compared to what Israel and the Jewish communities around the world spend on settlements in East Jerusalem and which amounts so far to more than $17.4bn."
A senior Palestinian official said the money would go towards improving infrastructure in mostly Arab East Jerusalem, building hospitals, schools, water wells and providing financial support to those whose homes have been demolished by the Israelis.
"We are not asking for too much or for the impossible, or even for an amount of money which our Arab brothers cannot match," al-Malki said.
He said the fund was much-needed "support if we really want to bolster the presence of Palestinians in Jerusalem."
Israel's settlement plans have also frustrated its allies and prompted a growing rift with Washington, a staunch supporter of Israel.
The US has demanded Israel make some concessions to bring the Palestinians back to the negotiating table after they abandoned indirect talks following the settlement announcement.
But Binyamin Netanyahu, the Israeli prime minister, has since confirmed plans to expand the Jewish presence in occupied East Jerusalem.
In a speech to America's influential Jewish lobby in Washington on Monday, Netanyahu said that "Jerusalem is our capital" and building will continue there as Israel sees fit.
Separately, ahead of the summit, Hoshyar Zebari, the Iraqi foreign minister, briefly walked out as a protest at a meeting between Muammar Gadaffi, the Libyan leader, and Iraqi opposition figures.
He declined to elaborate on the spat between Tripoli and Baghdad, but said "there were some negative positions concerning political developments in Iraq."