The Palestinian Authority said on Monday it had not been able to pay salaries for the first time since 2007 because of Israel's decision to halt the transfer of funds it collects on its behalf.

Prime Minister Salam Fayyad said Israel's decision, a move driven by Israeli concern over a Palestinian unity deal including Hamas, had put the Ramallah-based government in a "very difficult" financial position.

Fayyad said the PA had paid salaries to its 150,000 employees promptly on the 5th day of every month since mid-2007. "We are now on the 9th and we have not been able to meet this obligation," he said.

The Israeli government headed by Prime Minister Benjamin Netanyahu decided on May 1 to halt the transfers which make up 70 percent of PA revenues, citing fear that the money would go to Hamas, a militant group hostile to Israel.