Saeb Erekat, the Palestine Liberation Organization's secretary-general, said on Twitter that the change was about "advancing the agenda" of the settlement movement.

The Trump administration has defunded virtually all of the money -- about $400 million annually -- that the United States had relayed to the Palestinians. It has also moved the U.S. Embassy in Israel to Jerusalem while rolling its Palestinian interests sections into the embassy's business. U.S. officials previously dealt with Palestinians out of a separate Jerusalem consulate.

Trump administration officials also have retreated from favoring a Palestinian state as an outcome of peace negotiations.