Trump administration endorses bill suspending aid to Palestinian Authority
The PA makes a variety of social payments to the relatives of Palestinians detained by Israel or killed in violence, whether they were carrying out attacks or shot dead by Israeli military forces.
A dedicated fund was set up in the 1960s and estimates suggest it distributes as much as $100 million a year.
Around 35,000 families receive support from the fund.
The US State Department announced its support on Thursday six weeks after the Senate Foreign Relations Committee backed the measure.
The legislation, originally drafted exclusively by Republicans, was named after an American who was stabbed to death by a Palestinian in 2016.
"The Trump administration strongly supports the Taylor Force Act, which is a consequence of Palestinian Authority and Palestine Liberation Organization's policy of paying terrorists and their families," the State Department said.
Trump "raised the need to end any part of this program that incentivizes violence against Israeli and American citizens with President Mahmoud Abbas last May in both Washington and Bethlehem," it added.
Palestinian officials have long disputed accusations that the fund encourages terrorism.
Last month, chief representative of the Palestinian General Delegation to the US, Husam Zomlot, said the payments support families "who lost their breadwinners to the atrocities of the occupation, the vast majority of whom are unduly arrested or killed by Israel."
The payments made to prisoners' families vary depending on the length of their sentence, ranging from $400 per month to $2,200 for family members of those sentenced for 18 to 20 years.
Palestinian officials say some 850,000 people have spent time in Israeli prisons in the 50 years since Israel seized the West Bank during in the 1967 Six-Day War.
Israel currently detains some 6,500 Palestinians for a range of alleged offences and crimes, with detainees considered political prisoners in Palestinian society.
Ending such payments would be politically fraught issue for the Palestinian Authority.