Israeli Prime Minister Benjamin Netanyahu will continue to withhold more than £63 million in Palestinian Authority tax money because of the latest attempts to establish a unity agreement between Fatah and Hamas.

Israel collects the tax money for the PA under the Oslo Accords. Palestinian President Mahmoud Abbas and Hamas political leader Khaled Meshal have met to discuss the possibility of a Palestinian unity government.

Mr Netanyahu and eight senior ministers made the decision yesterday to continue to freeze the money. Mr Netanyahu has stated he believes it is in Israeli interests to transfer Palestinian money, but does not have a majority in the security-diplomatic cabinet to approve the transfer.

Withholding the money could ultimately affect the salaries of Palestinian police officers, and destabilise the security situation in the West Bank.

Mr Abbas and Mr Mashal will meet again in Cairo this week to discuss details which could result in unity government. A spokesperson for prime minister Salam Fayyad said he would resign should Fatah and Hamas reconcile.