Israel on Monday transferred 100 million dollars of Palestinian tax revenues to the Palestinian Authority, unblocking a freeze on the funds imposed after a unity deal between Fatah and Hamas.
Israel's Strategic Affairs Minister Moshe Yaalon announced Monday that the fund transfers would resume.
"We have unblocked the funds because we have established that the agreement between Fatah and Hamas has had no effect, the security cooperation (between Israel and the Palestinian Authority) continues on the ground," Yaalon told Israeli public radio.
But Yaalon, who also serves as a member of Israel's security cabinet, said he could not rule out the possibility that the funds would be frozen in the future.
"We will continue to verify that the money is not going into the accounts of terrorist organisations. If we believe that is the case, we will stop the transfers again," he said.
Palestinian Authority treasurer-general Yusef al-Zumar confirmed the transfers had resumed and that 352 million Israeli shekels (70 million euros, 100 million dollars) had been received so far.
"Israeli officials have told us that Israel has began transferring to us the tax revenues for the month of April," he told AFP.
Abdel Jabbar Salem, in charge of salaries at the Palestinian finance ministry, told Palestinian state news agency WAFA he would be able to start paying government employees their salaries straight away now that the funds had been transferred.
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Israel announced on May 1 that it would delay the transfer of the funds to the Palestinian Authority, in the wake of a surprise unity deal between the rival Palestinian movements Fatah and Hamas.
At the time, Israeli Finance Minister Yuval Steinitz said it would be up to Palestinian president Mahmud Abbas and prime minister Salam Fayyad to "prove" that the money would not fall into Hamas's hands.
He warned that any "communal fund would finance the terrorist activities of Hamas, and we want it established that there will be two separate funds."
Israel's decision to unfreeze the funds drew protest from the parents of captive Israeli soldier Gilad Shalit, who was seized in 2006 by Gaza militants including members of Hamas.
"The Shalit family regrets that the government of Israel, once again, hurried to cave in and free the tax money of the Palestinian Authority," they said, adding that they had written to Steinitz, Prime Minister Benjamin Netanyahu and Defence Minister Ehud Barak, asking them to reconsider.
On Sunday night, Fayyad's office said in a statement that he had been informed that the transfers would be resuming by US Secretary of State Hillary Clinton and Tony Blair, the special envoy for the international Middle East negotiating Quartet.
"Fayyad received phone calls from US Secretary of State Hillary Clinton and the Quartet special envoy Tony Blair, who informed him of the Israeli prime minister's decision to end the freeze on Palestinian Authority funds," it said.
Israel's decision to block the transfers was criticised across the international community, garnering objections from United Nations Secretary General Ban Ki-moon and European leaders.
It was also criticised by some members of the Israeli government who judged it hasty and warned it was a violation of Israel's obligation under the 1994 Paris Accords, which require the Jewish state to transfer Palestinian tax and custom revenue it collects at ports and border crossings.
The revenue accounts for around a third of the Palestinian Authority's budget and Fayyad had warned that the freeze left the government unable to pay the salaries of some 150,000 Palestinian government workers.