The Palestinian Authority (PA) has received 407 million shekels from Israel with more funds on the way soon following a deal to release frozen tax funds, the Norwegian government said on Thursday, according to Reuters.

Earlier this month, Norway agreed to help facilitate the transfer of frozen tax funds earmarked for the PA that were collected by Israel.

The temporary solution, which was approved by the Israeli Cabinet last month, will allow payments to resume and prevent a financial collapse for the PA, enabling it to pay salaries and provide essential services such as schools and healthcare, Norway said.

"This money is absolutely necessary to prevent the collapse of the Palestinian Authority, to ensure that the Palestinians receive vital services, and that teachers and health workers are paid," Norwegian Prime Minister Jonas Gahr Stoere said on Thursday.

More transfers were expected in "the coming days", he added without specifying the exact timing or the amount.

In November, the Political-Security Cabinet decided to offset from the funds of the PA all the money intended for the Gaza Strip, in addition to the offset that is carried out, in accordance with the law, of funds paid to terrorists and their families.

Upset by the Israeli move, the PA refused to accept the money that Israel collects on its behalf, unless the funds for Gaza are included, and returned it.