The Biden administration announced on Sunday that it will restart funding for the United Nations Relief and Works Fund for Palestine refugees (UNRWA) and other assistance cut by former President Donald Trump.
The US will provide $235 million in aid to the Palestinians via UNRWA.
The package, including humanitarian, economic and development assistance, was detailed by US Secretary of State Antony Blinken as part of an effort to repair American ties with the Palestinians that all but collapsed during Trump's tenure.
Chairwoman of the House Appropriations Subcommittee on State and Foreign Operations, US Congresswoman Barbara Lee welcomed the announcement, saying: "Today's announcement is a long-overdue step toward resuming positive U.S. relations with the Palestinian people and re-establishing the United States as a credible and constructive leader in the region."
"The Trump Administration's decision to end all humanitarian contributions to UNRWA in 2018, despite the fact that there was no alternative service provider, was both needlessly cruel and dangerously impulsive. It also weakened American credibility on the world stage and further undercut the goal of a two-state solution."
The move marks Democratic President Joe Biden's most significant step since taking office to make good on his promise to roll back some of his Republican predecessor's approach that Palestinians denounced as heavily biased in favor of Israel.
Prior to the Trump administration's cuts, the US had been providing UNRWA some $350 million a year, more than a quarter of the agency's $1.2 billion annual budget.