Palestinians protested on Friday and diplomats expressed disappointment over President Mahmoud Abbas's decision to postpone long-awaited elections.
Mr Abbas told Palestinian political groups that legislative elections scheduled for May 22 were being postponed until Israel guaranteed voting could take place in annexed East Jerusalem. It was not immediately clear whether a presidential vote scheduled for July would go ahead.
The votes were called after an agreement between Mr Abbas's secular Fatah movement, which controls the West Bank and its long-standing rival Hamas, which runs the Gaza Strip coastal enclave.
The Palestinian Central Elections Commission said it was suspending the election process after Mr Abbas's decision. Campaigning was supposed to begin on Friday.
Hamas said the postponement was a "coup against partnership" and Mr Abbas "would bear full responsibility for the decision and its consequences".
Protesters in the West Bank political capital of Ramallah denounced the president's move.
"We have an entire generation of young people that doesn't know what elections mean," protester Tariq Khudairi told AFP.
"This generation has the right to elect its leaders," he said.
"As a young Palestinian citizen, I call for conducting elections, and I want my right to elect so I would see new faces, young faces, and see new political stances," Wael Deys, from Hebron, told Reuters.
The elections will be the first Palestinian vote since 2006, and come amid a renewed international effort to end the Israeli-Palestinian conflict.
Tor Wennesland, the UN Special Co-ordinator for the Middle East Peace Process, called for the Palestinian leadership to set a new election date as soon as possible, saying a "prolonged period of uncertainty risks exacerbating the fragile situation".
"I fully understand the disappointment of the many Palestinians who have so clearly expressed a desire to exercise their democratic rights after nearly 16 years without elections.
"Recognising widespread international support, I encourage Palestinians to continue on the democratic path," Mr Wennesland said on Friday.
His predecessor, Nickolay Mladenov, said there was "no legitimate reason" for Mr Abbas to cancel the election.
"Denying your own people the right to elect their leaders is dangerous, wrong and fatally damaging to your national cause. I call for this decision to be immediately reversed in the interest of peace," Mr Mladenov said on Twitter.
Critics of Mr Abbas said that he would use the Jerusalem issue to buy time as Fatah's political prospects deteriorated.
Hamas, considered a terrorist group by most western countries, was seen as better organised than Fatah and well placed to gain ground in the West Bank.
Mr Abbas also faced challenges from Fatah splinter groups, including one led by Nasser Al Kidwa, a nephew of late Palestinian leader Yasser Arafat, and another by a powerful, exiled former Fatah security chief, Mohammed Dahlan.
Mr Abbas, 85, has been in power since 2005 and has ruled by decree for more than a decade.
The European Union's foreign policy chief Josep Borrell said the postponement was "deeply disappointing", and called for a new election date to be set "without delay".
"We reiterate our call on Israel to facilitate the holding of such elections across all of the Palestinian territory, including in East Jerusalem," Mr Borrell said.
Israel's foreign ministry said this week that elections were "an internal Palestinian issue, and Israel has no intention of intervening in them nor preventing them".
But it made no comment on voting in Jerusalem, the city it describes as its "undivided capital" and where it bans all Palestinian political activity.
Mr Abbas told Palestinian leaders that Israel told him it could not offer guidance on the Jerusalem issue because it currently had no government, a message he dismissed as nonsense.
Israel is mired in its worst political crisis yet, with no government formed after the inconclusive elections on March 23.