Palestinian Prime Minister Salam Fayyad said yesterday that he was willing to resign if the public demanded it.
Three days of street protests against high living costs have broken out across the occupied West Bank.
A fuel price increase of about 5 per cent sparked demonstrations in the Palestinian cities of Ramallah, Jenin and Hebron, where protesters burned an effigy of the prime minister.
"If there is a real public demand that I resign, and if it would solve the economic problems, then I would not hesitate to step down, nor would I delay it," Mr Fayyad said in Ramallah.
Mr Fayyad was appointed prime minister of an emergency government following the Hamas takeover of the West Bank in 2007.
Demonstrators had called for Mr Fayyad to "get out," accusing the former IMF official of corruptions and pursuing policies that hurt the poor.
The economy in the West Bank is facing a deepening financial crisis due to a drop in aid from Western and Gulf backers and growing Israeli restrictions on trade.
The Palestinian Authority is grappling with a recurring deficit and external debt, both of about £600 million, or nearly a fifth of gross domestic product, and a fifth of the West Bank's 2.5 million Palestinians are unemployed.
The cash crisis has delayed salary payments for some 153,000 civil servants several times this year.
Mr Fayyad said he did not know when the money would be available to pay last month's salary.
Continued, rigid Israeli controls have caused Palestinian growth rates of 9 per cent in 2010 to fall by half.
Palestinian President Mahmoud Abbas said that the "Palestinian Spring has begun" and that the protesters' demands to reduce costs were "right and fair."