The Palestinian government plans to establish a $50 million fund to help thousands of Palestinians quit work in Israeli settlements by the end of the year, the Palestinian labor minister said Thursday.

The fund, to be formally announced Monday, would be a major step in a widening boycott campaign against settlements scattered across lands the Palestinians want for their state. The Palestinian government has already banned the sale of settlement products in West Bank shops, threatening violators with stiff fines and even prison terms.

Israel has denounced the campaign as harmful to renewed U.S.-led peace efforts, and settler leaders have demanded that the Israeli government retaliate by closing Israeli ports to Palestinian goods.

The Palestinians say they must set an example if they expect the international community to take a stand against the settlements, built by Israel on the captured lands of the West Bank and east Jerusalem and now home to nearly half a million Israelis.

While Palestinian security forces have begun confiscating settlement goods from West Bank shops, the ban on settlement work is not to be enforced until the end of the year. West Bank unemployment remains high, and the Palestinian economy cannot absorb more than 20,000 settlement workers on short notice.

The Palestinian government plans to raise $50 million in local and international contributions to ease the transition for the workers, Palestinian Labor Minister Ahmed Majdalani told The Associated Press on Thursday. He said the Palestinian Cabinet would make a formal announcement about the dignity fund on Monday, but did not say who was expected to contribute.

He said money from the fund would be used as an incentive to Palestinian employers to hire former settlement workers, by paying half their salaries for the first year.