BARACK OBAMA’S administration is reviewing its $440 million (£260m) annual aid package to Palestine because of the state’s efforts to join the International Criminal Court, State Department spokeswoman Jen Psaki said on Monday evening.

Ms Psaki also criticised Israel for withholding tens of millions in tax revenues to the Palestinians, declaring that such a step “raises tensions.”

The Palestinian decision to join The Hague court followed the UN security council’s failure last month to back a three-year deadline for an Israeli withdrawal from the occupied West Bank.

“We’re deeply troubled by the Palestinian action,” said Ms Psaki.

She claimed that joining the court “is entirely counterproductive and does nothing to further the aspirations of the Palestinian people for a sovereign and independent state.

“It badly damages the atmosphere with the very people with whom they ultimately need to make peace.”

Under US law, any Palestinian case against Israel at the court would trigger an immediate cut-off of US financial support, but ICC membership itself wouldn’t automatically incur US sanctions.

Secretary of State John Kerry discussed the matter over the weekend with Israeli Prime Minister Benjamin Netanyahu.

Other US officials spoke to Palestinian President Mahmoud Abbas, hoping to dissuade him from his course.

President Abbas has been under heavy pressure to take stronger action against Israel after US-brokered peace talks collapsed last spring.

That was followed by Israel’s 50-day military offensive against Gaza that killed over 2,200 people, including more than 500 children.

The administration is reviewing assistance to the Palestinians to ensure it complies with US law, Ms Psaki said.