Palestinian President Mahmoud Abbas has said his government will stop implementing agreements with Israel in response to the demolition of newly built Palestinian homes near East Jerusalem.
A special committee will be formed to oversee the ceasing of all co-operation with Israel, Mr Abbas told a meeting of the Palestinian leadership convened on Thursday night to discuss the Israeli military's demolition on Monday of residential buildings, many of which were still under construction, in the Sur Baher area which straddles the West Bank and Jerusalem.
The majority of structures were in Area A of the occupied West Bank, under control of the Palestinian Authority, the body led by Mr Abbas that operates limited self-rule in the territory under Israeli occupation.
The PA had given residents permission to build the structures, but Israel said the buildings were too close to its separation barrier that cuts off the West Bank.
"We will not succumb to the dictates and the imposing of a fait accompli on the ground with brute force, specifically in Jerusalem. All that the occupation state is doing is illegal and void," Mr Abbas told the meeting in the West Bank city of Ramallah.
"We announce the leadership's decision to stop implementing the agreements signed with the Israeli side," he said.
Although the 84-year-old Palestinian leader has made similar threats before and not implemented them, he had never spoken so clearly and definitively of a break in co-operation.
Israel and the PA work together on matters ranging from water to security, but relations have worsened in recent months.
In February, Israel decided to deduct about $10 million (Dh36.7m) a month from tax revenues it collects on behalf of the Palestinians, corresponding to the amount it said the PA pays to families of prisoners or directly to inmates in Israeli jails.
Israel sees such payments as encouraging attacks while Palestinians see them as support for families who have often lost their main breadwinner.
The Palestinians have in response refused to take any of the roughly $180m in monthly tax revenues until the full amount is transferred, leaving the PA in financial crisis.
The demolitions on Monday, which were condemned by Arab states, the European Union and UN officials, appeared to be the last straw.
The destruction of Palestinian homes "can only be classified as ethnic cleansing and a crime against humanity that cannot be tolerated", Mr Abbas said.
Earlier on Thursday, Palestinian Prime Minister Mohammed Shtayyeh said the division of the West Bank into three administrative divisions – Areas A, B and C – as per the Oslo accords no longer existed because Israel no longer respected them.
Speaking to European diplomats and officials at his office in Ramallah, Mr Shtayyeh said Israel would continue its demolition of Palestinian homes and annexation of land in the West Bank if there was no appropriate response to the recent Israeli actions.
A UN Security Council resolution condemning the Sur Baher demolitions was reportedly blocked by the United States this week.