Jerusalem CNN  — 

Israel has agreed to release hundreds of millions of dollars in tax revenues and customs duties that it had withheld from the Palestinians for months, officials on both sides said Saturday.

The agreement could ease a quarrel that began at the start of January, when Israel – reacting to the Palestinian Authority’s announcement that it would apply to join the International Criminal Court – said it would freeze the tax revenues that it collects on the Palestinians’ behalf.

That revenue amounts to about $125 million per month, and the Palestinian Authority relies on that money to fund about two-thirds of its budget – including the salaries of civil servants – so the freeze had a significant impact on the Palestinians’ economy.

The frozen money will be released Sunday or Monday, Palestinian Minister of Civil Affairs Hussein al-Sheikh told the Palestinian Ma’an News Agency.

Two Israeli government officials, speaking on condition of anonymity, confirmed an agreement to release the money had been reached.

Details of the agreement weren’t immediately available.

Palestinian Authority Prime Minister Rami Hamdallah said late Friday that the PA would now be able to give government workers their April paychecks. The workers also will get back pay for paycheck that couldn’t be issued earlier this year, he said.

The tax dispute began after Palestinian Authority President Mahmoud Abbas on Dec. 31 signed a bid to join the International Criminal Court – a bid that the ICC went on to accept in April.

Israel, which is not an ICC member, opposed the Palestinians’ efforts to join the body, arguing in part that the Palestinian territories adjacent to Israel were not a state, though the Palestinians continue to press for one.

Spurring Israeli concerns: As an ICC member, the Palestinian Authority could pursue war crime complaints against Israel.

Israel announced in early January that it was freezing the Palestinians’ tax revenues in response to the ICC bid.

On March 27, Israel said it would release much of the frozen money because of “humanitarian concerns and in overall consideration of Israel’s interests.”

But the Palestinian Authority refused to accept the money because Israel was going to deduct the cost of utilities such as electricity and water – a deduction that the Palestinians said would have cost them about $100 million.

At the time, Palestinian Authority Ministry of Finance spokesman Abdel Rahman Bitani said the release of the funds should be negotiated between Israel and the Palestinians, not decided by Israel alone.

CNN’s Oren Lieberman reported from Jerusalem. CNN’s Jason Hanna wrote in Atlanta.