"As we stated immediately after the PA elections, upon the conclusion of the transitional government, Israel will immediately cease the transfer of funds to the PA," acting Prime Minister Ehud Olmert told the weekly cabinet meeting, reported Agence France-Presse (AFP).
The sanctions will see a permanent halt to monthly transfers of tax revenues Israel collects on behalf of the PA, worth around 50 million dollars.
Israel will ask international donors not to transfer funds to the PA once Hamas forms a government, Israeli officials said.
Israel will also prevent Palestinian residents in the West Bank and Gaza Strip from crossing into Israel for work and restrict the movements of Hamas members in the occupied West Bank.
Israeli government sources said security checks would also be stepped up at crossing points between Israel and the Gaza Strip.
Hamas MPs had to watch the swearing-in proceedings of the new parliament via video link rather than in person at the Ramallah-based parliament after Israel refused to issue them travel permits to the West Bank.
Hamas won a surprising 74 of the 132-seat legislature, against 45 for the Fatah party, entitling the resistance group to form the new government.
"We urge the American administration not to allow Israel to carry out its sanctions," said Abu Rdainah.
The Israeli sanctions drew immediate rebukes as a collective punishment against the Palestinians for electing Hamas.
Palestinian presidential spokesman Nabil Abu Rdainah dismissed the Israeli measures as harmful.
"We urge the American administration not to allow Israel to carry out its sanctions."
In his speech before the new parliament, Palestinian President Mahmoud Abbas urged Israel and the international community not to punish the Palestinians for electing Hamas.
"The Israeli freeze of monthly transfers of tax revenues to the Palestinians is a daylight theft," Arab Israeli Knesset member Mohamed Baraka told the Dubai-based Al-Arabiya channel.
He said the Israeli government repeatedly used such sanctions against the Palestinians to serve its own political interests.
"These sanctions are part of crimes against humanity practiced by Israel against the Palestinians. They adopted a similar approach with late president Yasser Arafat."
Baraka urged the international community to intervene to pressure Israel.
"The international community should live up to its responsibility. The United States should press Israel to halt these sanctions."
Olmert said Israel would not have any contacts with a Palestinian PA "which is either completely or partially controlled by Hamas".
"It is clear that in light of the Hamas majority in the PLC (parliament) and the instructions to form a new government that were given to the head of Hamas, the PA is, in practice, becoming a terrorist authority," he claimed.
Olmert argued that the new sanctions on the Palestinians were not designed to cause any humanitarian disaster.
"..we have no intention of impacting on the humanitarian needs of the Palestinian population."
Abbas was due to hold talks later on Sunday with Hamas members to officially ask the resistance group to form the new government.
Hamas has officially nominated Ismail Haniya, who topped its list in the elections, to be the new prime minister.
The group, which has five-week deadline to set up its government, said it was working to draw other Palestinian factions into a national unity government.
Hamas politburo member Khalil Abu Lila had told IslamOnline.net on February 4, the group has already settled on the names of the prime minister and ministers of the new government, but only awaited the go-ahead from Abbas.
Güncelleme Tarihi: 20 Eylül 2018, 18:16