The Israeli cabinet voted on Sunday in favor of transferring the first installment of withheld tax funds to the Palestinian National Authority (PNA), local daily Ha'aretz reported on its website.

The report said the first payment would be at least 50 million U.S. dollars, and remainder of the tax funds, collected by Israel on behalf of the Palestinians, will be transferred to PNA within six months.

The money would be transferred to the Palestinian emergency government sworn in PNA Chairman Mahmoud Abbas in the West Bank on June 17, said the report.

The emergency government replaced the Hamas-led unity one, which was dissolved by Abbas on June 14 following Hamas takeover of the Gaza Strip.

Israel began withholding the tax revenues, which it collects on behalf of the Palestinians, after Hamas defeated Abbas' secular Fatah in the January 2006 parliamentary elections.

Palestinian sources estimate that Israel currently holds about 700 million U.S. dollars in frozen revenues.

The tax fund release was the second "goodwill gesture" offered to Abbas and the emergency government in recent days, which was meant to bolster Abbas.

At the summit in Egyptian resort Sharm el-Sheikh late last month, Olmert announced that Israel would release 250 Fatah prisoners.

Source: Xinhua