Palestinian President Mahmoud Abbas made a rare visit to Israel on Tuesday for talks with Defence Minister Benny Gantz.
The two discussed economic, civilian and security matters, the defence minister said.
“[We] emphasised the importance of deepening security co-ordination and preventing terror and violence – for the well-being of both Israelis and Palestinians,” Mr Gantz said.
After the talks, the Defence Ministry announced plans to transfer 100 million shekels ($32 million) in tax revenue collected by Israel on the behalf of Palestinian authorities.
Israel will also register 6,000 undocumented residents in the occupied West Bank and a further 3,500 in Gaza, the ministry said.
There are tens of thousands such residents, according to Israeli NGO HaMoked, many of whom moved for family reasons and have been at risk of deportation for years.
Israel will also issue hundreds of permits more for Palestinian businessmen from the West Bank to work in the country.
New permits and paperwork were also announced in August after Mr Abbas hosted Mr Gantz in Ramallah, the seat of the Palestinian Authority in the West Bank.
A senior Palestinian official said the latest discussions dealt with increased tension in the territory, related to Israeli settlers, as well as economic and humanitarian affairs.
Hussein Al Sheikh, the Palestinian Authority's head of civil affairs, said the meeting also addressed "the importance of creating a political horizon".
Tuesday’s talks were the first time since 2010 that Mr Abbas has travelled to Israel for a meeting with officials, Israeli media reported.
He also made a trip to attend the 2016 funeral of former Israeli leader Shimon Peres.
Mr Abbas, 86, has held power since 2005 and this year indefinitely postponed Palestinian elections.
His meeting with Mr Gantz was condemned as a provocation by Hamas, the militant group that rules Gaza.
“It again shows the great decline of this authority and its president,” Hamas said.
The talks were also criticised by Israeli opposition party Likud, led by former premier Benjamin Netanyahu, which accused the government of being “dangerous for Israel”.
The Palestinian Authority, which has limited self-rule in the West Bank, co-operates regularly with Israel on security and civilian matters.
Last year, Mr Abbas halted such co-operation for six months because of Israeli plans to annex parts of the West Bank that it has occupied since the 1967 Arab-Israeli war.
The proposal has since been scrapped and a new Israeli administration came into office in June.
Mr Gantz, a former military chief, was appointed defence minister last year and retained the post after elections.
Israel’s government is a broad coalition that includes an Arab party for the first time, although right-wing Prime Minister Naftali Bennett is opposed to Palestinian statehood.
The administration is not expected to advance Palestinian-Israeli peace talks, which stalled more than a decade ago.
US State Department spokesman Ned Price said Washington was "very pleased" Mr Gantz had hosted Mr Abbas.