Israel: Netanyahu government to help prevent collapse of Palestinian Authority
Netanyahu said the decision had been made at a meeting of his security cabinet on Sunday, with eight members of the top-level forum supporting the move.
The vote was not unanimous, however, with one voting against and one abstaining.
The PA, established in 1994 following the Oslo Accords, holds devolved authority over parts of the occupied West Bank and was supposed to mark the first tentative step towards Palestinian sovereignty and negotiations over the creation of an independent state.
In the years since its creation, however, it has become widely unpopular over its corruption, authoritarianism and security cooperation with Israel. Palestinian President Mahmoud Abbas, aged 87, has also long outstayed his mandate as president.
The PA's collapse would see governance of the West Bank fully returned to the Israeli state, as was the case between 1967 - when Israeli conquered the territory - and 1993.
Since 1967, Israel has seized land for nearly 700,000 settlers in more than 250 settlements and outposts across the West Bank and East Jerusalem in violation of international law.
The draft declaration agreed on Sunday presents a series of demands for the PA to "cease its anti-Israel activity in the international legal-diplomatic arena".
In January, Netanyahu's government announced a series of sanctions against the PA over a push by Ramallah to get the International Criminal Court (ICC) to issue an advisory notice over Israel's actions in the West Bank.
The move, according to Palestinian Prime Minister Mohammed Shtayyeh at the time, was aimed at "pushing (the PA) to the brink - financially and institutionally".
The document also called on the PA to end "incitement" and "illegal construction in Area C" of the West Bank, which is under full Israeli control and covers about 60 percent of the territory.
A number of senior figures internationally have warned about the potential collapse of the PA.
In an interview with CNN on Sunday, US President Joe Biden said the PA had "lost its credibility, not necessarily because of what Israel's done, just because it's just lost its credibility, number one, and, number two, created a vacuum for extremism.
"It's not all Israel now on the West Bank, all Israel's problem, but they are a part of the problem," he added.