Netanyahu raised the topic during talks in the Knesset, the newspaper said.
The prime minister said he decided to consider the move because the Palestinians have refrained from pursuing further unilateral appeals to international organizations, the newspaper said.
One official quoted by the newspaper said Israel has no interest in causing the collapse of the Palestinian Authority and is therefore considering release of the funds.
On Sunday, Palestinian Prime Minister Salam Fayyad said he would be unable to pay thousands of civil servants because of Israel's failure to transfer the funds, the report said.
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