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Israel transferred $100 million to the Palestinian Authority on Friday. The funds are part of the Palestinian tax revenues that have been frozen since the Hamas-led government came to power in the PA.

Prime Minister Ehud Olmert promised the fund transfer to PA Chairman Mahmoud Abbas last month, but it was delayed until a "Hamas bypass route" was devised.

According to a senior Jerusalem officials, Israel refused a PA request to deposit the money in a Beirut bank account.

The Palestinians eventually agreed to use an Israeli bank for the transfer, which was then carried out.

The money will be used for humanitarian projects, among other things.

Saeb Erekat, the head of the Palestine Liberation Organization's negotiating team, said in an interview with Israel Radio that he hopes Israel will also transfer the remaining tax revenues to the Palestinian Authority.

Palestinian Prime Minister Ismail Haniyeh said that he hopes the Arab states will pressure Israel to release the remaining funds.