Nabil Abu Rudaineh, spokesman for the PA president's office, said that the Palestinian leadership was unaware of the Iranian decision.
He said that the PA "rejects any attempt to bypass it and insists that the PLO is the sole and legitimate representative of the Palestinians."
Abu Rudaineh said that the PLO was the "only address for the Palestinian people." The PLO would not hesitate to provide aid and ease the suffering of the Palestinians despite its limited capabilities, he added.
The PA spokesman said the Palestinian leadership rejects the Iranian "trade in the suffering" of the Palestinians.
Iran's ambassador to Lebanon, Mohamed Fathali, said this week that Tehran would offer $7,000 to the families of each Palestinian killed in what he called the "Al-Quds Intifada."
Iran will also give $30,000 to Palestinian families whose homes have been destroyed by Israel, he told a news conference in Beirut.