As one of his final acts as US President, Barrack Obama ordered that $221m (€206m) in funding would be given to the Palestinian Authority - this payment has now been blocked by Republicans in the US congress.
They will access whether the payment is in-line with the Trump White House's policies.
The new US president has reiterated his support for Israel and is believed to be considering moving the US embassy in Israel from Tel Aviv to Jerusalem - a move which would go against the 1947 UN partition plan which put the city under international control. Moving the US Israeli embassy there would not recognise this agreement and be likely to aggravate Palestinians.
Former Secretary of State John Kerry notified Congress that the funds would be released on Friday morning - hours before Donald Trump was sworn in.
Congress has approved funding for the Palestinian Authority in a move aimed at bringing stability to the region.
However, payments were blocked amid concerns from two Republican lawmakers, relating to the use of this money and fears that the authorities are making unilateral attempts to be recognised as a state by taking actions outside of US-backed peace efforts.
Kay Granger, one of the representatives who had initially blocked the release of the funds said, "I am deeply disappointed that President Obama defied congressional oversight and released $221m to the Palestinian territories."
"I worked to make sure that no American taxpayer dollars would fund the Palestinian Authority unless very strict conditions were met. While none of these funds will go to the Palestinian Authority because of those conditions, they will go to programs in the Palestinian territories that were still under review by Congress," she added.