President Mahmud Abbas and his cash-strapped administration had faced questions over the construction of the USD 17.5 million palace, which was initially intended as a presidential headquarters and location where foreign dignitaries could be received.
Abbas has now decided to transform the 4,700-square-metre complex into a Palestinian national library, culture minister Ehab Bessaiso told AFP.
The complex sits on some 27,000 square metres of land.
"The president believes the palace should be used for public benefit by turning it into a huge national library supervised by a board of trustees," said Mohammed Shtayyeh, head of the Palestinian Economic Council for Development and Reconstruction (PECDAR).
Its construction was paid for by the Palestinian finance ministry and PECDAR, an institution that handles donor funds.
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