Palestinian Prime Minister Salam Fayyad pledged to reduce spiralling fuel prices today.
The US-trained economist is attempting to calm growing unrest in the West Bank, where protesters have been angrily claiming that his policies are responsible for their tough living conditions.
He told a news conference that he would cancel a recent price rise in fuel charges and fund the subsidy with the money he would cut from the salaries of government ministers and other top officials.
Even as he was speaking, several hundred demonstrators gathered outside his office to continue the previous days' protests against rising prices and the government's failure to pay salaries to civil servants.
Most of the protesters were government workers or trade union activists
Mr Fayyad has said he is virtually powerless because the donor nations that sustain his government have failed to deliver promised aid.