But Israeli leaders warned that future transfers of the funds collected on behalf of the Palestinian Authority would hinge on the shape and tenor of the new Palestinian government. The money had been relayed automatically each month, under a long-standing economic agreement.

Hamas, a radical Islamic group sworn to Israel's destruction, won the right to form a new Palestinian government after capturing a majority of legislative seats Jan. 25 from the long-dominant Fatah party of Palestinian Authority President Mahmoud Abbas.

Israel proceeded with the transfer, due last Wednesday, because ''Hamas has not yet formed a government on the other side,'' Foreign Ministry spokesman Mark Regev said. But he said future transfers would no longer be automatic but would ''depend on how things will develop on the other side.''

Palestinian leaders complained of Israel's decision to suspend the transfer, saying the money was urgently needed to help pay the salaries of some 135,000 public employees.

Israeli leaders have vowed to have no dealings with a Hamas-led government unless the group recognizes Israel, renounces violence and adheres to agreements in place between the Palestinians and Israel.

The new Palestinian parliament is to convene Feb. 16, and Hamas leaders say they hope to form a government by month's end.

Hamas has carried out dozens of suicide bombings and other attacks against Israelis during more than five years of conflict. It is considered a terrorist organization by Israel, the United States and the European Union.

The United States and Europe have threatened to halt tens of millions of dollars in aid unless Hamas drops its rejection of Israel and renounces armed struggle.

Palestinian officials have warned that such an aid cut could be catastrophic. Western countries contribute about $1 billion a year.

Hamas leaders have indicated they hope to find financial help elsewhere.

In Gaza City, Israeli aircraft fired missiles on Sunday night that struck two cars traveling a short distance apart, killing two members of Islamic Jihad who were involved in making and firing rockets from Gaza, Palestinian security officials said.

Also, a predawn Israeli airstrike killed three members of Al Aqsa Martyrs Brigades and wounded five more group members.