Israel will not transfer tax and tariff funds it collects for the Palestinians this month in response to their successful bid for upgraded U.N. status, Finance Minister Yuval Steinitz said on Sunday.

"I have no intention of transferring the taxes due to the Palestinian Authority this month. They will be used to pay the Palestinian Authority's debts to the Israeli electricity company," Steinitz said.

A Palestinian shot by Israeli troops in the southern Gaza Strip on Friday has died of his wounds, a Palestinian medical official said.

The official said that Mahmud Jarghun, 21, died early on Saturday morning at a hospital near the town of Rafah, of a gunshot wound to the pelvis.

The International Criminal Court's prosecutor's office said on Friday it was considering the legal implications after the U.N. General Assembly's overwhelming vote to make Palestine a non-member state.

"The Office of the Prosecutor takes note of the decision" and will now "consider the legal implications of this resolution," it said in a statement sent to Agence France Presse but declining to elaborate.

Palestinian leader Mahmoud Abbas called on Friday for a return to peace talks, but slammed Israel's latest settlement plans in reaction to a United Nations vote recognizing Palestine as a non-member state.

"I've said a thousand times that we want to resume negotiations and we are ready to do it," Abbas told reporters in New York.

Canada on Friday ordered back its heads of mission in Israel and Ramallah, as well as its envoys to the United Nations and Geneva, over Palestine's bid for an upgraded status at the United Nations.

"Canada is deeply disappointed but not surprised by yesterday's result at the United Nations General Assembly," Foreign Affairs Minister John Baird said in a statement.

Israel revealed plans on Friday to build 3,000 settler homes in east Jerusalem and the West Bank in response to the Palestinians' historic success in being recognized as a non-member state at the United Nations.

During the landmark Thursday vote in New York, the U.N. General Assembly overwhelmingly backed a resolution recognizing Palestine within the 1967 borders as a non-member observer state.

March 14 General-Secretariat congratulated on Friday Palestine on acquiring the status of a “non-member observer state” at the United Nations, calling this step a “historic victory conforming to the events of the Arab spring”.

"This proved that historical achievements can be reached through the cooperation of the legitimate authority in Palestine along with Arabic and international authorities,” the March 14 statement said.

U.N. leader Ban Ki-moon warned Thursday ahead of key vote on U.N. recognition of a Palestinian state that the Middle East peace process is on "life support".

But he told a U.N. meeting that only "direct negotiations" between the Palestinians and Israelis can lead to a permanent settlement.

Italy will vote in favor of granting upgraded status to the Palestinians at the United Nations later on Thursday, the government said, despite earlier press reports that it would abstain.

"Italy has decided to offer its support for the resolution giving Palestinian non-member permanent observer status at the General Assembly of the United Nations," the government said in a statement.

Israeli Prime Minister Benjamin Netanyahu on Thursday downplayed a Palestinian attempt to secure upgraded status at the United Nations, saying it won't help them achieve their long-promised state.

"The decision at the United Nations today won't change anything on the ground," Netanyahu said at a ceremony in Jerusalem. "It won't promote the establishment of a Palestinian state, it will distance it.