Israel is looking at ways to prosecute senior Palestinians for war crimes in the US and elsewhere in response to Palestinian steps to join the International Criminal Court, according to an Israeli official.

Also on Saturday, an Israeli official told the Haaretz newspaper that it would halt a transfer of $127m in tax revenues collected on behalf of the Palestinians for December following the ICC bid.

Chief negotiator for the Palestine Liberation Organisation, Saeb Erekat, told Al Jazeera the block showed that Israel was scared over the move to join the ICC.

"Israel collects our customs and our taxes for us so then when they withold these funds it means that this month people will not be able to pay the schools, the hospitals, the medical supplies, the milk and bread, so they are trying to suffocate the whole nation.

"It shows that when it comes to enforcing collective punishment, they are punishing four million Palestinians, starving them, because they want to act with impunity.

"This shows the legitimacy of what we are doing in the ICC," he added.

The Palestinians delivered to UN headquarters in New York on Friday documents on joining the Rome Statute of the ICC and other global treaties, saying they hoped to achieve "justice for all the victims that have been killed by Israel, the occupying power".

The Hague-based court looks at cases of severe war crimes and crimes against humanity such as genocide.

The Israeli official on Saturday said Palestinian leaders "ought to fear legal steps" after their decision to sign onto the Rome Statute.

"Israel is weighing the possibilities for large-scale prosecution in the United States and elsewhere" of Palestinian President Mahmoud Abbas and other senior Palestinians, the official said.

Israel would probably press these cases via non-governmental groups and pro-Israel legal organisations capable of filing lawsuits abroad, a second Israeli official said, explaining how the mechanism might work.

Israel sees the heads of the Palestinian Authority in the occupied West Bank as collaborators with Hamas, the Palestinian group which governs the Gaza Strip, because of a unity deal they forged in April, the first official said.

Netanyahu's warning

Benjamin Netanyahu, Israeli prime minister, has previously warned that unilateral moves by the Palestinian leadership at the UN would expose its leaders to prosecution over support for Hamas, viewed by Israel as a terrorist organisation.

"[Hamas] ... commits war crimes, shooting at civilians from civilian populated areas," the official said, alluding to a war in Gaza last summer in which more than 2,100 Palestinians and more than 70 Israelis died.

Palestinians seek a state in Gaza, the West Bank and East Jerusalem - lands Israel captured in the 1967 Middle East War.

Momentum to recognise a Palestinian state has built since Abbas succeeded in a bid for de facto recognition of Palestinian statehood at the UN General Assembly in 2012, which made Palestinians eligible to join the ICC.

The US, Israel's main ally, supports an eventual independent Palestinian state, but has argued against unilateral moves like Friday's, saying they could damage the peace process.

The US sends about $400m in economic support aid to the Palestinians every year. Under US law, that aid would be cut off if the Palestinians used membership in the ICC to press claims against Israel.