Hatem Shaludi, 25, and 16-year-old Mohammed Rajabi were both shot dead in September during separate alleged stabbing attacks on Israeli soldiers in the occupied city.
Israeli authorities returned their bodies for burial by their families yesterday.
Since October 2015, 246 Palestinians, 36 Israelis, two Americans, a Jordanian, an Eritrean and a Sudanese have been killed in a wave of violence, according to an AFP count.
Most of the Palestinians killed were carrying out knife, gun or car-ramming attacks, according to Israeli authorities.
Since the start of the violence, Israeli forces have confiscated the bodies of killed Palestinians, often for several months, as a means of deterrence and to prevent clashes during funerals.
Israel is still withholding the remains of seven Palestinians, three from Hebron which is a frequent hotspot.
Mourners at today's funerals carried pictures of the deceased, Palestinian national flags and banners of various Palestinian groups, including the Islamist militant movement Hamas.
It was not known, however, if either Shaludi or Rajabi were directly linked to Hamas, which controls the Gaza Strip.
The decision by the security cabinet followed the release by Hamas of video footage showing a mock birthday party for Israeli soldier Oron Shaul, believed by the army to have been killed in the 2014 Gaza war.
The government did not elaborate on the burial plan, but said that the same meeting discussed ways of getting back the remains of Shaul and another soldier killed in the Gaza war and obtaining the release of two Israeli civilians missing in Gaza and believed to be held by Hamas.
He said that Hamas turned down the offer.
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