The latest cuts come from $10 million in programmes on reconciliation involving Palestinians as well as Jewish and Arab Israelis.
The portion of the money involving Palestinians in the occupied West Bank and Gaza Strip was being redirected to programmes between Jewish and Arab Israelis, a US embassy official said.
It was not clear how much of the $10 million was being redirected.
US officials also could not confirm whether the latest cut meant all non-security related aid to the Palestinians had now been eliminated.
“As announced in August, the administration redirected more than $200 million that was originally planned for programmes in the West Bank and Gaza,” a US embassy official said.
“At the same time we redirected a portion of the $10 million which was planned for conflict management and mitigation.”
The official said the portion involving Palestinians in the West Bank and Gaza would be used “to enhance” programmes in Israel instead.
US President Donald Trump has said he will withhold aid from the Palestinians to force them to negotiate as the White House prepares a plan for Middle East peace — what he has called the “ultimate deal”.
The Palestinian leadership cut off contact with the White House after Trump recognised the disputed city of Jerusalem as Israel’s capital in December.
They accuse Trump of blatant bias in favour of Israel and say he is blackmailing them to force them to accept the White House’s terms.
In recent weeks, the US government has announced more than $500 million in cuts in Palestinian aid, including cancelling support for the UN agency for Palestinian refugees.
It has maintained security-related aid, having provided $61 million in assistance this year.