Deputy Foreign Minister Danny Ayalon called for international donors to halt funding to the Palestinian Authority, alleging that much of the money is ultimately used to support terrorism.

Speaking at a meeting on the sidelines of the UN General Asembly, Ayalon said Sunday that too much money was funneled to the Gaza Strip, which is ruled by Hamas, an Islamic extremist group that has not renounced terror.

“About 50 percent of the PA budget is directed to Gaza, which is controlled by Hamas terrorists,” Ayalon told the Ad Hoc Liaison Committee of Donor Countries to the Palestinian Authority, which coordinates international aid to the PA.

He called on the international community of donor states to use its influence to force Hamas to accept the three conditions laid out by the Middle East Quartet, which consists of the US, the UN, the EU and Russia: renunciation of terror, acceptance of “roadmap to peace” obligations and recognition of Israel’s right to exist.

He also said that the PA uses some of the money to fund terrorists and their families.

Ayalon said cutting off funding would force Ramallah to come to the table for serious negotiations. The deputy minister slammed the PA’s attempts to achieve unilateral UN recognition and moreover threatened to cut off Israeli support for the Palestinian economy.

“The Palestinian Authority, which cannot even collect municipal taxes, wishes to pose as a state,” he said. “It is clear that the PA does not meet the minimum requirements of a state. It also fails to meet another requirement of the UN Charter — to be a peace-loving nation.”

Ayalon added that “Israel has done much this year to help the PA overcome the economic crisis, and has taken measures to stabilize and strengthen Palestinian society, but if it will continue to use this help to finance terror and to pursue unilateral action, this cooperation will be in jeopardy.”

Ayalon’s comments underlined the divide between the Foreign Ministry and the Prime Minister’s Office on the issue of funding for the PA. Two weeks ago, Foreign Minister Avigdor Liberman slammed Prime Minister Benjamin Netanyahu for transferring a NIS 250 million advance of tax revenue to the PA, saying that Israel should stick to written agreements and refrain from making goodwill gestures toward the Palestinians. Liberman has also repeatedly criticized PA President Mahmoud Abbas, calling him a “diplomatic terrorist.”

The Palestinian Authority has of late been wracked by economic problems which have threatened to destabilize the West Bank. Protesters across the territory took to the streets earlier this month to demand the ouster of Prime Minister Salam Fayyad.

A recent report by the Ad-Hoc Committee said without an uptick in foreign funding, the chances for a two-state solution could collapse.