In an apparent punitive move following the swearing in of a Palestinian unity government, Israel has revoked special travel permits for all Palestinian Authority officials other than President Mahmoud Abbas, a Palestinian official said Tuesday.

Israel was also revoking free travel rights for members of the outgoing Palestinian government who were not appointed to the Hamas-Fatah unity government and would examine restrictions on other Palestinians with VIP travel passes, said Yoav Mordechai, who heads the Israeli military unit tasked with coordinating activity in the West Bank and Gaza.

The Palestinian official told the London-based, pan-Arab al-Hayat newspaper that Israel wants to prevent ministers in the new government from traveling between the West Bank and Gaza Strip. Israel has also notified the PA that it is considering withholding Palestinian tax revenues estimated at over $100 million, the official said.

On Sunday, the Israeli cabinet members decided not to hold any further negotiations with the PA as long as Hamas, considered a terror group, takes part in government affairs. The cabinet further ruled that Israel would reallocate some Palestinian tax money and use the funds to pay off the Authority’s debts to Israeli companies. The cabinet also barred three Hamas ministers from attending Monday’s government swearing-in ceremony, according to Israel Radio.

The Palestinian government was sworn in in Ramallah on Monday, and although Israel was quick to register its displeasure, the US said it would work with the new government while “watching carefully to make sure” it upholds the principles that serve as preconditions for continuing US aid to the PA.

Israeli ministers lashed out at Washington over its decision to work with the new Palestinian unity government.

“Unfortunately, American naiveté has broken all records. Any collaboration with Hamas which kills women and children is unacceptable,” said Communications Minister Gilad Erdan, a security cabinet member considered close to Prime Minister Benjamin Netanyahu.

“This American capitulation can only damage chances of resuming (peace) negotiations,” Erdan said in remarks communicated by his bureau late on Monday.

US-led peace talks collapsed in late April after the Palestinians announced the surprise unity deal between leaders in the West Bank and the Hamas-run Gaza Strip, with Israel saying it would not negotiate with any government backed by the Islamists.

Under terms of the agreement, Hamas and Fatah, which dominates the West Bank administration, worked together to formulate an interim government of independents which will prepare for elections within the next six months.

“At this point, it appears that president Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki told reporters.

“With what we know now, we will work with this government,” she added.

To add to the embarrassment and dismay, Netanyahu told the security cabinet on Sunday that Kerry had promised Israel that Washington would not immediately recognize the new government, the Haaretz newspaper reported, quoting two ministers present at the meeting.

“I have to say I do not understand this American announcement,” said Intelligence Minister Yuval Steinitz, accusing Washington of saying one thing behind closed doors and another in public.

“You cannot present it as a Hamas government internally, then present it publicly as a government of technocrats,” he told Army Radio Tuesday.

“If these (ministers) are people who identify with Hamas, Hamas identifies with them and appointed them, then they are representatives of Hamas. This is a Hamas government, and Hamas is a terror organization,” he said.

Responding to the US announcement late on Monday, an Israeli government source said Washington’s actions were playing into the hands of Abbas.

“If the US administration wants to advance peace, it should be calling on Abbas to end his pact with Hamas and return to peace talks with Israel,” he said. “Instead, it is enabling Abbas to believe that it is acceptable to form a government with a terrorist organization.”