The latest cuts come from $10 million in programmes on so-called reconciliation involving Palestinians and Israeli Zionists.

The portion of the money involving Palestinians in the occupied West Bank and Gaza was being redirected to programmes between Jewish and Arab Israelis, AFP quoted a US embassy official as saying.

"As announced in August, the administration redirected more than $200 million that was originally planned for programmes in the West Bank and Gaza," he added.

"At the same time we redirected a portion of the $10 million which was planned for conflict management and mitigation."

The official said the portion involving Palestinians in the West Bank and Gaza would be used "to enhance" programmes in In the Zionist entity instead.