RAMALLAH, West Bank (AP) - The Palestinian Authority has agreed to accept hundreds of millions of dollars in tax revenues collected by Israel months after declining them in protest, Palestinian officials said Friday.

The PA had refused to accept the funds because Israel was withholding an amount equal to what the Palestinians pay to the families of prisoners and those killed in the conflict, including slain militants. The cash-strapped PA now appears to be retreating in the face of an economic crisis.

Israel says the so-called Martyrs’ Fund rewards and encourages violence, while the Palestinians view it as a way to provide for needy families affected by the decades-old conflict. Palestinian President Mahmoud Abbas has long rejected violence in favor of peace talks, but the peace process has been moribund for the last decade. In a speech before the U.N. General Assembly last month, Abbas vowed to continue the payments.

Hussein al-Sheikh, an aide to Abbas, tweeted Friday that he had met with Israel’s finance minister the day before to discuss “all outstanding issues” and that committees would continue the negotiations on Sunday.

“The agreement was also on transferring a payment from the #PA’s financial dues. The dispute (remains) over the salaries of the families of #prisoners and #martyrs. We are determined to pay their dues at all costs.”

A spokesman for Israel’s Prime Minister Benjamin Netanyahu referred questions to the Finance Ministry, which did not immediately respond to a request for comment.

The transfers amount to some 600 million Israeli shekels (about $170 million) a month and are a key source of financing for the PA, which governs parts of the Israeli-occupied West Bank.

Two Palestinian officials, who spoke on condition of anonymity because they were not authorized to brief media, say Israel will continue to withhold 42 million shekels ($12 million) a month, the amount it says goes to the Martyrs’ Fund.

The decision back in February to reject the transfers has forced the PA to slash the salaries of tens of thousands of civil servants in the West Bank, where unemployment is estimated at 20%.

Abbas, who has been in power for nearly 15 years, has seen his popularity plummet over his failure to bring about an independent state through peace talks with Israel, his loss of Gaza to the Islamic militant group Hamas and the general economic malaise.

In August, the Palestinian Authority said it had reached an agreement with Israel in which Israel would stop collecting about $60 million in monthly fuel taxes and allow the Palestinians to collect the funds directly.

The move was seen as a way of easing pressure on the Palestinian Authority, which works closely with Israel on security matters in the occupied territory.

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Associated Press writer Joseph Krauss in Jerusalem contributed.

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