Peer is currently ranked number 45 in the world
The Dubai Championships has been fined a record $300,000 (£207,000) after Israel's Shahar Peer was barred from competing in the event.
Peer, 21, was refused entry to the United Arab Emirates, which does not have diplomatic relations with Israel.
She will be awarded $44,250, an amount equal to the average prize money she earned per tournament in 2008.
"The actions taken are intended to redress the wrongs suffered by Peer," said WTA chief executive Larry Scott.
"Our tour will not tolerate discrimination of any kind and we will never allow this situation to happen again in the UAE or elsewhere."
A special meeting of the WTA Tour board was convened on Friday at which the decision was taken to fine the tournament "for breach of Tour Rules, By-Laws and conditions of membership".
The proceeds of the fine will be used to compensate Peer and her doubles partner Ana-Lena Groenefeld for loss of potential prize money, and the balance will be donated to charity.
Dubai organisers said they feared a threat to the player's safety because of public opinion on the Gaza conflict.
While playing in a tournament in Auckland, New Zealand in January, Peer had to contend with a noisy protest over Israel's military action in Gaza.
The Dubai tournament is one of the most prestigious on the women's tour, with nine of the top 10 players competing this year.
Peer was scheduled to play 15th seed Anna Chakvetadze of Russia in the $2m event on Monday, but the 21-year-old's request for a visa was turned down.
The world number 48 said she expected the WTA to act against the "injustice", adding: "There should be no place for politics or discrimination in professional tennis or indeed any sport."
WTA rules state that no host country can deny a player the right to compete at any event on the tour for which she has qualified by ranking.
Scott said he had considered cancelling the tournament when he heard about the situation, but decided to allow it to go ahead after consultation with Peer.