The security cabinet decided on Sunday to reduce the supply of electricity to Gaza, Haaretz reported.
The decision was a response to the request of Palestinian Authority (PA) chairman Mahmoud Abbas, according to the newspaper, which cited an Israeli official familiar with the details of the meeting.
According to the official, the ministers accepted the IDF's recommendation against leniency toward Hamas and to continue its policy of supplying electricity to Gaza in accordance with Abbas' decision to reduce the amount of money he is transferring to Israel for the supply of electricity.
A power plant which supplies 30 percent of Gaza's electricity stopped functioning on April 16 after a dispute broke out between the PA and Hamas over taxation on fuel.
Gaza receives its power from the Israeli energy company Dor, but has not paid the company for several months. After a previous energy crisis a few months ago, Gaza received a supply of fuel from Turkey andQatar, but both supplies have since been spent.
The official quoted by Haaretz said that IDF Chief of Staff Gadi Eizenkot, head of the Military Intelligence Directorate Herzi Halevi and Coordinator of Government Activities in the Territories Yoav Mordechai described a worsening economic and humanitarian situation in Gaza.
Military commanders believe that further reductions in the electricity supply to Gaza are likely to hasten escalation in Gaza. However, the official said that Israeli army officials who participated in the meeting did not advise leniency toward Hamas. According to him, Mordechai proposed that Israel adopt a policy that would not contradict Abbas' position.
The Ramallah-based PA has admitted it has no control over the goings on in Gaza, which was overtaken by Hamas in a bloody coup in 2007.
Currently, the majority of Arabs in Gaza are receiving about four hours of electricity per day, but Hamas leaders enjoy electricity 24 hours a day, seven days a week.
Mladenov said that Israel, the PA and Hamas "all have obligations for the welfare of Gaza's residents".