Israel plans work permits for 5,000 Palestinians in West Bank
The Israeli government says it will issue 5,000 more permits to allow Palestinians to work inside Israel.
The planned move comes amid fears that the Palestinian Authority (PA) in the West Bank could collapse.
Wages in the territory are typically less than half of those in Israel, and the move is aimed at boosting the Palestinian economy.
Thousands of Palestinians have protested in recent weeks against high fuel and food prices.
Last week, the World Bank warned that the PA faced a $400m (£246m) budget shortfall and asked donors to act urgently. It also criticised Israel for stifling growth in the West Bank.
The Israeli cabinet is expected to approve the new permits this week, and it is reported that Palestinian building and farm labourers would benefit from the plan.
Israel is worried that economic pressures could bring instability and violence to the Palestinian territory, the BBC's Jon Donnison in the West Bank reports.
One senior Israeli government minister said there were even fears the PA could collapse.
Last week, the Palestinian Authority's Prime Minister, Salam Fayyad, was forced to cut value-added tax (VAT) and fuel prices after several days of strikes and violent demonstrations.
However, some Palestinians will be cynical about the Israeli move, our correspondent adds.
Several times in the past year Israel has withheld tax revenues it collects on behalf of the PA. This resulted in tens of thousands of civil servant not being paid on time.
In its report on the Palestinian economy the World Bank said there was a "deepening fiscal crisis" and "worrying signs of economic slowdown" in the West Bank.
The document also criticised Israel for stifling growth in the 60% of the West Bank which comes fully under its control.
Israel says measures it has imposed there, such as road blocks and access restrictions, are necessary for its security.
President Mahmoud Abbas has proposed cancelling the 1994 Paris Protocol on economic co-operation with Israel, which was signed following the Oslo Accords.