Arab League foreign ministers have agreed during a meeting to send hundreds of millions of dollars in aid to the Palestinian Authority to make up for punitive measures imposed by the Israeli government after a successful bid for recognition at the United Nations.
The UN General Assembly voted overwhelmingly last month to recognise Palestine as a non-member observer state, an historic though largely symbolic move.
Israel responded by withholding some $100m per month in taxes and customs duties it collects on behalf of the Palestinian Authority (PA).
The Israeli government said the money will instead go to pay Palestinian debts owed to Israeli companies.
Saeb Erekat, the chief negotiator from the Palestine Liberation Organisation (PLO), an umbrella group of Palestinian political factions, said that Arab states agreed on Sunday in the Qatari capital, Doha, to make up for the shortfall.
"We agreed that Arab states activate a resolution of providing $100m per month," he said.
"The Qatari prime minister and the Arab League secretary-general will follow up the implementation of this resolution within two weeks."
Mahmoud Abbas, the Palestinian president, had warned that the PA could collapse without the funds. Many of the authority's employees have not received their full wages for months. "We can't pay the salaries," he said.
'Reconsider the peace process'
Also at the meeting, Qatari officials called for a rethink of the so-called Arab Peace Initiative, a long-stalled 2002 initiative which offered normalisation with Israel in exchange for a withdrawal from the occupied territories and a "just settlement" for Palestinian refugees.
"It is logical after 10 years to objectively reconsider the peace process, including the Arab initiative," Hamad bin Jassim Al Thani, Qatari prime minister, said.
Hamad, who heads the Arab League's follow-up committee on the initiative, said the proposal "would not be on offer forever."
Abbas, for his part, told the ministers in Doha that he opposed withdrawing the plan, warning that it could lead to regional conflict.
"It is not permissible to talk about sidelining the Arab peace initiative. It should stay," he said.
"It is a very important initiative, and I hope we would not talk every time about shelving it, because that would mean war."
Hamad also criticised the Quartet on the Middle East, a diplomatic body made up of the US, the European Union, Russia and the UN, describing it as a "failure, and unable to make any achievements".
He called for a "re-evaluation of its performance".