FILE PHOTO: Palestinian President Mahmoud Abbas gestures during his meeting with Britain's Prince William in Ramallah, in the occupied West Bank June 27, 2018. Alaa Badarneh/Pool via Reuters

RAMALLAH, West Bank (Reuters) - Palestinian President Mahmoud Abbas said on Sunday his government would keep paying stipends to Palestinians jailed by Israel, their families, and the families of those killed by Israeli forces despite a new Israeli law to penalize the policy.

Israel has repeatedly demanded that the Palestinians, who view prisoners as national heroes, stop paying stipends to them and their families, saying they are a reward and encouragement for the prisoners’ actions against it. The Palestinians say they are welfare payments to support them and their families.

A week ago Israel enacted a law that orders holding back part of the roughly $130 million in tax revenues it collects on behalf of the Palestinians each month under interim peace agreements as a penalty.

“The money we pay to families of prisoners and martyrs, which Israel opposes, we will not allow anyone to intervene with it,” said Abbas, whose Western-backed Palestinian Authority has limited self-rule in the occupied West Bank. “We will continue to pay for them.”

“We are watching and are waiting and we will take the appropriate measures that suit our interest,” Abbas said in comments published by the official Palestinian Wafa News Agency.

According to Palestinian officials, the payments to inmates serving longer sentences for more serious offences are larger than to others serving shorter sentences for lighter offences. Israel says this is an incentive to commit more severe attacks.

Palestinian officials say that some 6,500 Palestinians are currently being held in Israeli jails. Many of them were convicted of attacks or planning attacks against Israelis.