Prior to the declaration, Trump and his envoys, including senior advisor and son-in-law Jared Kushner, had spent months seeking to negotiate how to restart talks between Israel and the Palestinians, which have stalled since 2014.
On December 6, 2017, US President Donald Trump stated that time has come to officially recognize Jerusalem as the capital of Israel and ordered the Department of State to start preparations for moving the US embassy from Tel Aviv to this city.
In a statement, the delegates also backed comments on Sunday by Mr Abbas that the Oslo peace accords of the early 1990s, which form the basis of the Palestinians' relations with Israel, were "finished".
The Department of State said over the weekend that funding levels are still "under review". "There are still deliberations taking place". The White House did not immediately respond to questions about the matter.
Palestinians want the annexed eastern sector of the city as the capital of their future state, and Abbas has said Trump's stance means the USA can no longer be the mediator in peace talks with Israel.
"We can say no to anyone if things are related to our fate and our people, and now we have said no to Trump", he said.
The U.S.is the Relief and Works Agency's largest donor, supplying almost 30 percent of its total budget.
Israeli troops shot dead a 24-year-old Palestinian man in clashes that broke out in the West Bank on Monday, Palestinian health officials said.
Hundreds of thousands of Palestinians either fled or were forced from their homes during the war that led to Israel's establishment in 1948.
Eliminating or sharply reducing the US contribution could hamstring the agency and severely curtail its work, putting great pressure on Jordan and Lebanon as well as the Palestinian Authority. Gaza would be particularly hard hit.
He also said he would move the USA embassy there from Tel Aviv, where all other nations have their diplomatic missions. The U.S. was set to contribute a similar amount this year, but the State Department put the payments under review following Trump and Haley's criticism.
But after a highly critical January 2 tweet from Trump on aid to the Palestinians, the State Department opted to wait for a formal policy decision before sending any of the $125 million. "Shame on you. When did we reject the talks?"
The UN on Monday expressed concern over press reports that the United States government may significantly cut financial aid to a UN agency for Palestinian refugees.
The Palestinian leader reiterated that he would pursue a resolution to the Middle East conflict that provides for the establishment of a Palestinian state along the borders of 1967, with East Jerusalem as the capital. He said the agency only perpetuates problems and should cease operating in the region.
Palestinian refugees are given aid through UNRWA, which is a separate organization from the U.N. High Commissioner for Refugees.