Israel has cancelled its membership of UNESCO in protest at the UN agency's vote to admit Palestine as a full member.

Israel has already taken other measures in retaliation for UNESCO's move, which saw 114 UNESCO states agree to accept Palestinian membership.

Palestinian leaders are hoping many more UN agencies will follow suit and that it will boost their hopes of similar recognition at the UN itself.

But Israeli prime minister Benjamin Netanyahu has now ordered a halt to Israel's financial contributions to UNESCO in protest.

The US has also announced similar action. The US provides around 22 per cent of UNESCO's funding.

Israel on Tuesday suspended tax revenues to the Palestinian Authority and it has accelerated construction of thousands of Jewish houses in a West Bank settlement.

UNESCO said the cut in funding from the US will threaten some of its programs including Holocaust education and a tsunami warning program.