UNITED NATIONS (REUTERS,AFP) - US President Donald Trump said in tweets that the United States may withhold future aid payments to Palestinians, accusing them of being "no longer willing to talk peace" with Israel.

A senior Palestinian official strongly condemned the threat.

"We will not be blackmailed," Hanan Ashrawi said in a statement. "President Trump has sabotaged our search for peace, freedom and justice. Now he dares to blame the Palestinians for the consequences of his own irresponsible actions!"

Trump said that Washington gives Palestinians "HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect. They don't even want to negotiate a long overdue peace treaty with Israel ... with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?"

The President's tweets follow plans disclosed by his UN ambassador earlier on Tuesday (Jan 2) to stop funding a United Nations agency that provides humanitarian aid to Palestinian refugees.

"The President has basically said he doesn't want to give any additional funding, or stop funding, until the Palestinians agree to come back to the negotiation table," Ambassador Nikki Haley told reporters when asked about future US funding for the UN Relief and Works Agency for Palestinian refugees.

The US is the largest donor to the agency, with a pledge of nearly US$370 million (S$492 million) as of 2016, according to UNRWA's website.

Relations between the Palestinians and Washington soured early last month after Trump recognised Jerusalem as Israel's capital, generating outrage across the Arab world and concern among Washington's Western allies.

Weeks later, more than 120 countries defied Trump and voted in favour of a UN General Assembly resolution calling for the United States to drop its stance on Jerusalem's status.

"What we saw with the resolution was not helpful to the situation," Haley said on Tuesday.

"The Palestinians now have to show to the world that they want to come to the table. As of now, they're not coming to the table but they asked for aid. We're not giving the aid, we're going to make sure that they come to the table and we want to move forward with the peace process," she said.

Palestinian President Mahmoud Abbas has called the Trump administration's decision on Jerusalem the "greatest crime" and a flagrant violation of international law, and said it was unacceptable for the United States to have a role in the Middle East peace process because it was biased in favour of Israel.

On Tuesday, the Israeli Parliament passed an amendment that would make it harder for it to cede control over parts of Jerusalem in any peace deal with the Palestinians.