Palestinian leaders said yesterday they will not be "blackmailed" after US President Donald Trump threatened to cut aid worth more than $300 million annually, his latest provocative move that could upturn years of careful diplomacy.

Trump drew praise from a cabinet minister in Israeli Prime Minister Benjamin Netanyahu's right-wing government but a warning from a former Israeli peace negotiator of the dangers in cutting off financial assistance to the Palestinians.

On Twitter on Tuesday, Trump said that Washington gives Palestinians "HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect. They don't even want to negotiate a long overdue peace treaty with Israel ... with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?"

Hanan Ashrawi, a member of the Palestine Liberation Organization's executive committee, said in response: "We will not be blackmailed."

Palestinian anger at Trump is already high over his December 6 recognition of Jerusalem as Israel's capital, a declaration that also generated outrage across the Arab world and concern among Washington's Western allies.

Commenting on Trump's tweets, Nabil Abu Rdainah, a spokesman for Palestinian President Mahmoud Abbas, said: "Jerusalem is not for sale, neither for gold nor for silver."

Abu Rdainah said the Palestinians were not opposed to returning to peace talks that collapsed in 2014, but only on the basis of establishing a state of their own along the lines that existed before the 1967 war.

Meanwhile, a Palestinian teenager was yesterday shot dead in clashes with the Israeli army near the city of Ramallah in the occupied West Bank.