The Palestinian prime minister says Israel's seizure of millions of dollars in tax funds has left him unable to pay the salaries of 160,000 government workers.

Salam Fayyad says his government is in a "very difficult financial situation."

Israel collects some $100 million in customs and other taxes for the Palestinians each month, making up nearly half of the Palestinian government's income. The rest comes from local taxes and Western aid.

This month, Israel said it was withholding the funds to protest a reconciliation deal between Fayyad's Western-leaning government and the Islamic Hamas government in Gaza. Israel considers Hamas a terrorist group.

Fayyad told a news conference in the West Bank Monday that the salaries were supposed to be paid last week.