Jerusalem, Aug 10 (IANS): Israeli Prime Minister Benjamin Netanyahu has said that public funds for Arab municipalities would be used for the designated purpose of serving Arab citizens following evaluation and supervision, a day after a cabinet minister's announcement to freeze them drew criticism.

"Israel's Arab citizens deserve what all citizens deserve and I am committed to this," Netanyahu was quoted as saying on Wednesday in a statement released by his office.

Israeli Finance Minister Bezalel Smotrich said on Tuesday that he has frozen funds for Arab municipalities in Israel and Palestinian higher education programmes in East Jerusalem on the ground that they could potentially benefit "criminal organisations" within Arab society, Xinhua news agency reported.

The decision involves 200 million shekels (about $53.81 million), which would have come in the form of scholarships for low-income Palestinian residents of East Jerusalem to enroll in prep classes at the Hebrew University in Jerusalem and two other colleges in the city.

Opposition leader Yair Lapid, Israel's former Prime Minister, slammed Smotrich for making such a "racist" decision.

Netanyahu's office stressed in the statement that the policy of Netanyahu is "to facilitate the development and social welfare of all Israeli citizens, Arab and Jewish alike".

"The funds for the Arab local authorities in Israel will be transferred pursuant to an evaluation and supervision that they will be used for their designated purpose -- for Israel's Arab citizens and nothing else," it noted.