The Israeli security cabinet voted on Sunday to activate a law which freezes half a billion shekels (approximately £106 million) worth of funds for the Palestinian Authority in protest over payments to Palestinian prisoners who were jailed for murdering Israelis.

But both Israeli and Palestinian officials believe there is a distinct possibility that the money will be released in two months, after the Israeli election.

For over two decades Israel has routinely transferred money to the Palestinian Authority that it collects from tariffs on Palestinian imports — under the terms of the Paris Agreement.

An Israeli law allowing the government to freeze these funds was passed by the Knesset last July, but was not enacted over Israeli fears that the cutting of funds would jeopardise the cooperation with the Palestinian security apparatus.

But the murder of 19-year-old Ori Ansbacher near Jerusalem on February 7 galvanised the government to take new steps.

Prime Minister Benjamin Netanyahu announced the move last week when he said: “we will complete the work necessary to putting the law in effect and on Sunday, I will convene the cabinet and we will pass the resolution. No-one should be in doubt that the money will be cut.”

It is unclear how the government decided on the precise sum to be frozen. In 2018, the PA spent a total of 1.2 billion shekels (£256 million) in stipends for prisoners, their families and the relatives of Palestinians killed while attacking Israelis.

Critics of the decision attacked the government for saying that they are “cutting” the money, when in practice it will merely be frozen indefinitely.

One senior Labour MK drew attention to the fact the funds had been frozen while the cabinet authorised transferring “a fortune” to Hamas in Gaza, referring to Qatari funds approved earlier this month.

“It is stupidity, hypocrisy, populism and harm to the security of the state,” the Labour MK said.

“The prime minister is choosing to dry out the PA, with which we have security cooperation preventing terror attacks and saving lives, while reinforcing a murderous terror organisation.”

The Palestinians reacted angrily to the Israeli cabinet's decision, with President Mahmoud Abbas saying that “this is a totally unacceptable decision and it will have severe implications at all levels.”

But the PA refrained from announcing any concrete retaliatory steps. It reflected the view prevalent both in Jerusalem and Ramallah that the cabinet’s decision was prompted by election considerations and that there is a distinct chance Israel will quietly release the funds after the election on April 9.