The minister of defense held responsibility for administration and security of the Arab population of the occupied territories. Until 1981, actual command passed from the minister of defense to the Department of Military Government, a functional command within the general staff, and from this department to the regional commanders of the Gaza Strip and the West Bank in their roles as military governors. The military governors exercised primarily a coordinating function because day-to-day operations in the territories were carried out not by military officers, but by civilian representatives of the various ministries.

In 1981 Israel established a separate civilian administration in the territories to exercise the civil powers of the military government. This administration lacked authority to enact legislation. The civilian officials who carried out these executive functions nominally drew their authority from the military government in fact, they were part of the permanent staff of Israeli ministries and received directives from their ministerial superiors. This relinquishment of responsibility by the Ministry of Defense and its assumption by Israeli civil authorities gathered momentum under governments controlled by the right-wing Likud Bloc, whose policies sought to achieve de facto annexation by subordinating all civilian matters in the occupied territories to ministries of the government in Jerusalem.

A civilian "coordinator of activities" in the Ministry of Defense acted in the name of the minister of defense to advise, guide, coordinate, and supervise all government ministries, state institutions, and public authorities in the occupied territories. In 1988 the coordinator was Shmuel Goren. Neither the minister of defense nor the coordinator of activities, however, had veto powers over officials answerable to civilian ministries in Jerusalem.

Local government in areas of the West Bank occupied by Palestinians consisted of twenty-five towns having municipal status and eighty-two village councils operating under the Jordanian Village Management Law. After 1981, when the Israeli civil administration deposed nine West Bank mayors, Israeli officials ran most municipalities. Under them, Arabs held the vast majority of government administrative and staff positions. Until the latter part of 1988, when King Hussein cut off all funds to the West Bank, Jordan paid the salaries of about 5,000 of these civil servants. The remaining 16,000, who were mostly teachers, had their Israeli salaries supplemented by a Jordanian bonus averaging US$100 monthly.

Jewish settlements in the West Bank were incorporated into fourteen local authorities. These authorities functioned under special military government legislation identical to the local authorities legislation that applied in Israel. The Ministry of Interior supervised their budgets and in general the West Bank settlements functioned as though they were in Israel proper.

Data as of December 1988