Israel's far-right Finance Minister Bezalel Smotrich has frozen millions of dollars in funding to Arab towns and Palestinian education programmes in occupied East Jerusalem, a move that much of Israel's opposition has condemned as racist.
"The priorities of our national government ... are different from those of the previous leftist government and we should not apologise for that," Mr Smotrich said.
"This is a final decision," Israel's Kan public broadcaster quoted him as saying on Tuesday, claiming the freeze is supported by Prime Minister Benjamin Netanyahu.
The move blocks more than $85 million in development funds pledged under previous governments and will leave many Arab councils unable to deliver basic services.
Benny Gantz, leader of the opposition National Unity party, said Mr Smotrich's decision "reeks of racism and harms not only [Arabs], but society as a whole".
Kan first reported the freeze on Sunday when it published a letter from Interior Minister Moshe Arbel to Mr Smotrich, urging him to release the funds.
Mansour Abbas, who heads the United Arab List in the Knesset, accused the minister of racism.
Mr Abbas served in Israel's last government, which approved the original funds.
"Arab citizens are entitled to those funds, which were meant to close the gaps between Arab and Jewish communities," the politician told Reuters.
Opposition leader and former prime minister Yair Lapid also accused Mr Smotrich of racism, "abusing Arab citizens simply because they are Arab".
Palestinian citizens of Israel make up about 20 per cent of the population and human rights groups say Arab areas are often neglected, underfunded and subject to discrimination.
A key member of Mr Netanyahu's ultra-conservative and religious cabinet, Mr Smotrich has previously come under fire for racist remarks against Palestinians.
National Security Minister Itamar Ben-Gvir, also notorious for his anti-Palestinian views, has previously called for funding for Arab communities to be cut.
Other government ministers from the PM's Likud party have called on Mr Smotrich to release the money, including Intelligence Minister Gila Gamliel.
Millions in funding will also be cut for East Jerusalem educational programmes, which prepare Arab students for university but which the minister claimed promote extremism.
He referred to "Islamic cells" at the Hebrew University, one of Israel's top universities, in Jerusalem.
The university's president was among academic chiefs who spoke out against the move in an open letter on Monday.
The decision "would doom the young people of East Jerusalem to a fate of indolence, without promise of employment and without the ability to live in a shared society", they said.