Israel has declared that it will release up to $60m (£32m) in duties owed to the Palestinians to boost the funding mechanism being drawn up in an effort to stem a mounting humanitarian crisis in Gaza and the West Bank.
The Israeli move on humanitarian aid was signalled in a television interview by Tzipi Livni, the Israeli Foreign Minister, which initially took officials by surprise.
Ms Livni said the funds which Israel had been withholding since the formation of the Hamas government could be released provided they were used for humanitarian purposes and not for salaries of more than 150,000 employees.
It follows a partial climbdown by the US administration, which has relented on its all-out opposition to a trust fund which Europeans hope will avert the total collapse of essential Palestinian services such as health and education.
Meanwhile, a group of Hamas members in Hadarim prison joined with ones in Fatah in backing the goal of a Palestinian state on the borders with Israel which existed before the Six Day War in 1967.
The move appeared to be a significant modification by the Hamas prisoners of their long-held stance in favour of eliminating Israel.