The Palestinian government says work will cease in all government offices, a day after its headquarters in Ramallah were stormed by protesters.
Fatah-Hamas tension has reached a peak in recent days
The Hamas-led administration said the suspension also followed "attempts to kidnap officials".
Rival gunmen from the Hamas and Fatah movements have clashed again in the West Bank, causing several casualties.
Deadly gun battles started in Gaza on Sunday after pro-Hamas militiamen moved to quell protests about unpaid wages.
Correspondents say the move to close government offices comes amid the most serious round of internecine feuding since Hamas took power in March.
The Hamas spokesman who made the announcement did not say when work would be resumed or what steps might be taken to keep the government running.
Prime Minister Ismail Haniya of Hamas has called for calm after Sunday's factional fighting, which left eight people dead and about 60 wounded.
The interior ministry said Hamas militiamen had been ordered to withdraw, and Gaza's streets were back under control of regular security forces.
Civil servants, including security forces loyal to the Fatah faction, have been protesting about not receiving full salaries from the Hamas-led government.
On Sunday, the Hamas militia in Gaza moved in to end the protests, sparking armed confrontations in Gaza and retaliation against the seat of government in Ramallah, on the West Bank.
Monday saw fresh violence. In Nablus, in the northern West Bank, armed attackers wounded at least two bodyguards of deputy Prime Minister Nasser al-Shaer of Hamas.
And a shopkeeper in Jericho was killed by gunmen when he refused to comply with a strike imposed to protest against events in Gaza.
Earlier on Monday, protesters loyal to Fatah had stoned the home of Refugees Affairs Minister Atef Udwan in Beit Hanoun.
Hamas guards fired into the air to clear the crowds, who were chanting anti-government slogans.
Armed Fatah supporters also clashed with Hamas guards at the main hospital in Gaza City, as they came to collect the body of one of those killed in Sunday's clashes.
Witnesses said the 20-minute gun battle did not result in further casualties, but patients and doctors were sent scrambling for cover.
The government says it cannot afford to pay the full salaries of civil servants because of the embargo by Israel and Western countries, which regard Hamas as a terrorist organisation.
Mr Haniya has also been locked in an increasingly bitter power struggle with Palestinian Authority President Mahmoud Abbas of Fatah.
The two have been trying unsuccessfully to form a unity government, eight months after Hamas crushed Fatah in parliamentary elections.
Mr Abbas is being pressured by Washington not to join a Hamas-led government unless it meets international demands, including recognition of the legitimacy of Israel.
This week Mr Abbas is due to meet US Secretary of State Condoleezza Rice, who is visiting the region in an effort to restart peace talks between Israel and the Palestinians.
Also on Monday, a Palestinian fisherman from southern Gaza was killed by fire from an Israeli naval ship, after he strayed beyond the authorised area for fishing imposed by the Israelis in Gaza's territorial waters.