The US government plans to close the Palestine Liberation Organisation (PLO) office in Washington in its latest show of support for the US-Israel relationship, officials said.
American national security adviser John Bolton is expected to address the decision later in a speech.
Mr Bolton plans to say: “When the Palestinians refuse to take steps to start direct and meaningful negotiations with Israel,” Donald Trump’s administration will no longer keep the office open.
The US government notified the Palestinians last year that it will shut their office in Washington unless they enter serious peace talks with Israel.
Palestinian official Saeb Erekat said the move “is yet another affirmation of the Trump administration’s policy to collectively punish the Palestinian people, including by cutting financial support for humanitarian services including health and education”.
The PLO formally represents all Palestinians. Although the US does not recognise Palestinian statehood, the PLO has maintained a general delegation office in Washington which facilitates Palestinian officials’ interactions with the US government.
The head of the PLO delegation to the US accused the Trump administration of “dismantling decades of US vision and engagement in Palestine”.
Ambassador Husam Zomlot said: “Weaponising humanitarian and developmental aid as political blackmail does not work.”
Mr Trump, a Republican, has delivered a number of blows to the Palestinians during his time in office.
Most recently, the American government ended US funding for the United Nations agency that helps Palestinian refugees, slashing aid for projects in the West Bank and Gaza and cutting funding to hospitals in Jerusalem that serve Palestinians.
The US president also recognised Jerusalem as Israel’s capital and moved the US Embassy there, from Tel Aviv.
Dozens of Palestinians were killed in protests that erupted following the move, and Palestinians have since rejected the US as a peace broker.
Although the Israelis and Palestinians are not engaged in active, direct negotiations, Mr Trump’s administration has been working to mediate a peace deal that would end the Israeli-Palestinian conflict.
Led by Jared Kushner, Mr Trump’s son-in-law and a senior aide, White House officials have been preparing a peace proposal they intend to put forward at an unspecified time.
Mr Trump has promised to pursue the “ultimate deal” between the Palestinians and Israel.
However, such a deal is unlikely given Palestinian mistrust of his administration.