Israel has begun transferring tax funds to the Palestinian Authority as part of a series of steps aimed at bolstering Palestinian President Mahmoud Abbas.
A 120-million payment was received Sunday by the new government formed by Mr. Abbas after last month's takeover of Gaza by the militant group Hamas.
Israeli officials say the Palestinians will receive the remaining tax funds over the next six months.
Palestinian officials estimate that Israel owes some 700-million dollars in withheld tax revenues. Israeli officials say that figure is much less because Palestinian debts are being deducted from the total.
Israel suspended the transfers after Hamas won Palestinian elections early last year.
Meanwhile, Israel has vowed to push ahead with a crackdown on Palestinian militants, following a wave of deadly Israeli air strikes in Gaza.
Prime Minister Ehud Olmert told his Cabinet that Israel will continue to launch pinpoint raids against Palestinian militants planning attacks on Israeli civilians. He also said the army would continue raids in the West Bank.
An international human rights group said Palestinian rocket attacks on Israel and Israeli strikes near populated areas of Gaza violate the laws of war. Human Rights Watch also said Palestinian militant groups and Israeli defense forces have both shown insufficient regard for civilian life.