Israel transfered vital tax funds to the Palestinian Authority Tuesday, after holding up the money for a week, a Palestinian offical said.

The transfer was delayed after Palestinian Prime Minister Salam Fayyad called on the European Union and OECD (Organization for Economic Cooperation and Development) not to upgrade their relations with Israel.

Yusuf Zumor of the Palestinian Finance Ministry says the $54 million arrived on Tuesday. But he says an additional $20 million is missing. Zumor says Israeli officials didn't say why they cut the amount. Israel said it would deduct some NIS 70 million from the PA's money to cover debts.

A senior Israeli official blasted Fayyad, saying: "He stabbed Israel in the back."

Relations between Israel and the PA have been tense in the last few days due to Israel's withholding the Palestinians' tax money. Holding up the money has caused several days' delay in paying wages to some 150,000 Palestinians employed by the PA.

An Israeli source said Israel had suspended the transfer because of two letters Fayyad had sent the EU and OECD, urging them to reconsider upgrading their relations with Israel, in view of its actions in the territories.

Fayyad accused Israel of violating international law by continuing to build settlements, ignoring the International Court of Justice's ruling about the separation fence and infringing on the human rights of tens of thousands of Palestinian laborers.

Israel sees its joining the OECD and upgrading relations with the European Union as enormously important, as they are expected to yield future gains of billions of shekels. Finance Minister Roni Bar-On heard of Fayyad's letters and reported this to Prime Minister Ehud Olmert and Foreign Minister Tzipi Livni.

Israel is furious with Fayyad, officials said.

"We go toward him and try to comply with every request he makes, and he goes and acts in such a contemptible way," a senior official said.

"We permitted an additional 5,000 Palestinian workers to enter Israel, contrary to the defense establishment's recommendations, and he says we're infringing on their rights. This is unacceptable," the official said.

Olmert broached the subject at his meeting with PA chairman Mahmoud Abbas Monday of last week.

"This act is not in keeping with the present relations between Israel and the PA," Olmert told Abbas.

"I strongly protest against it," he said.

An Israeli source who attended the meeting said Abbas "fumed" at Fayyad's letters and said he had no part in it.

Bar-On, who authorizes the PA's tax transfer every month, instructed treasury officials to reexamine the Palestinian debt balance to Israel. During the examination, which took a few days, no money was transferred to the PA.

When treasury officials found that the PA owed NIS 70 million to the Israel Electric Corporation and Health Ministry, Bar-On told them to deduct these sums from the Palestinians' tax money.

Following the Palestinians' complaints, United States Ambassador in Israel Richard Jones asked senior Finance Ministry officials for explanations.

The officials told him they did not accept Fayyad's "double standards."

"We're not an unfeeling ATM," one official told him. "We too are permitted to get angry when such scummy things are done to us."

Palestinian Foreign Minister Riyadh al-Maliki said Israel decided to withhold the money as "a punitive act because of the [Palestinian] government's responsible national stance."

Fayyad himself said in private conversations that it was clear to him that Israel was penalizing the Palestinian Authority in view of his firm positions against Israel on various issues, which he presented to the European Union.