Norway has agreed to act as an intermediary to help unfreeze tax funds earmarked for the Palestinian Authority (PA) that are held by Israel, the Norwegian foreign minister said on Wednesday.

Under interim peace accords reached in the 1990s, Israel's finance ministry collects tax on behalf of the Palestinians and makes monthly transfers to the PA. But no payments have taken place since November following the outbreak of war between Israel and Hamas militants based in the Gaza Strip in October.

On Jan. 21, Israeli officials said the Israeli cabinet had approved a plan for frozen tax funds earmarked for the Gaza Strip to be held by Norway instead of transferred to the PA.

On Wednesday, Foreign Minister Espen Barth Eide said Norway had agreed to act as an intermediary for the transfer of the tax funds but that the specifics were still being worked out.

"Work is now underway to try to establish the framework for such a solution. We are in dialogue with both the Israeli and Palestinian authorities and other stakeholders," Barth Eide told Reuters, without giving further details.

He said he was deeply concerned about the PA's financial situation, which he described as "grave".

In addition, the freeze "endangers the (PA's) ability to provide basic services, like paying salaries to health workers and teachers, among others," he said.

Accessing this revenue is key to the survival of the PA, which exercises limited self-rule in the Israeli-occupied West Bank.

Several Western countries, including the United States, want the PA to play a role in the administration of the Gaza Strip, should the war come to an end.

Norway is part of an international effort to build a broad, Palestinian unity government, with Western nations aiming for the PA to play a key role in it.

The country served as a facilitator in the 1992-1993 talks between Israel and the Palestine Liberation Organization that led to the Oslo Accords in 1993.

On Nov. 2, Israel said it would proceed with a tax revenue transfer to the PA in the West Bank but would withhold funds bound for Gaza, ruled by Hamas but where the PA helps cover public sector wages as well as medicine and social assistance programmes.

But on Nov. 6, the PA said it wanted the money in full and would not accept conditions that prevent it from paying its staff. It is estimated to spend some 30% of its budget in Gaza.

(Reporting by Gwladys Fouche in Oslo; Editing by Angus MacSwan)