The United States (US) has decided to close the Palestinian mission in Washington in the latest move against them by President Donald Trump, a Palestinian official said on Monday, denouncing it as a “dangerous escalation".

“We have been notified by a US official of their decision to close the Palestinian mission to the US,” Palestine Liberation Organisation secretary-general Saeb Erekat said in a statement.

“This is yet another affirmation of the Trump administration's policy to collectively punish the Palestinian people, including by cutting financial support for humanitarian services including health and education.”

The Palestinian leadership cut off contact with the Trump administration after the US president recognised the disputed city of Jerusalem as Israel's capital in December.

Trump has since pledged to withhold aid from the Palestinians until they return to the negotiating table as his White House seeks to craft a plan for Middle East peace, what he has called the “ultimate deal".

In recent weeks, the US has cut more than $200 million in bilateral aid to the Palestinians as well as cancelled its support for the United Nations agency for Palestinian refugees.

The US is also angered by a Palestinian bid to have Israel investigated for war crimes at the International Criminal Court.

The decision to close the mission comes just ahead of the 25th anniversary of the first Oslo accord on September 13, sealed with a handshake on the White House lawn and meant to lead to Israeli-Palestinian peace.