Trump can call off action if he determines Palestinians 'have entered into direct, meaningful negotiations with Israel'.
The Associated Press reported the development on Friday, saying the move may give President Donald Trump extra leverage in pushing forward on peace talks.
Trump can call off the action if he determines the Palestinians "have entered into direct, meaningful negotiations with Israel", a State Department official told Anadolu Agency on condition of anonymity.
It is unclear what would constitute "direct, meaningful" talks.
Under a 2015 U.S. law, the secretary of state must certify to Congress that the PLO has not taken action with the ICC, and Rex Tillerson was unable to do so by a November deadline, according to the official.
At issue is Palestinian President Mahmoud Abbas' call for the ICC to investigate and prosecute Israelis at the UN General Assembly in September, according to the American newswire, Associated Press (AP).
There are no current peace talks between the Palestinians and Israelis, but the Trump administration has been seeking to restart the process.
Trump's son-in-law and special adviser, Jared Kushner, has been at the forefront of the efforts. And the White House is preparing a proposal to put forward to the parties at a yet undetermined time, the AP said.
The State Department official emphasized to Anadolu Agency that Washington is not cutting off its ties with the PLO, and intends to continue working with the Palestinian Authority (PA) and pursue resumed peace talks.
"This measure should in no way be seen as a signal that the U.S. is backing off those efforts. Nor should it be exploited by those who seek to act as spoilers to distract from the imperative of reaching a peace agreement," the official said.
The PLO is the officially recognized representative of the Palestinian people while the PA is the de jure governing authority in the West Bank and Gaza Strip.