The decision to create a single diplomatic mission was announced last October by Secretary of State Mike Pompeo, who did not say at the time when this would take place.
"The merger of the consulate and the embassy will take place on March 4th or 5th, at which point the position of the consul-general will end, said the US official, who spoke on condition of anonymity because the date has not been announced yet by Washington.
US President Donald Trump outraged the Arab world and stoked international concern by recognizing Jerusalem as Israel’s capital in December and moving the US Embassy from Tel Aviv to Jerusalem in May. Palestinian leaders suspended ties with the US administration after the embassy move.
The consulate general in Jerusalem is the top mission for Palestinians, who with broad international backing seek east Jerusalem as the capital of a state they want to establish in the West Bank and the Gaza Strip.
At the time of Pompeo's announcement, senior Palestinian leader Saeb Erekat denounced the decision to eliminate the consulate as the latest evidence the Trump administration is working with Israel to impose a "Greater Israel" rather than a two-state solution.
Asked on Tuesday about the merger, Nabil Abu Rudeineh, a spokesman for Palestinian President Mahmoud Abbas, told Reuters that nothing had changed from their point of view.
"Contacts at the political level with the American administration have been cut off and will remain so unless the American administration changes its positions on Jerusalem and the refugees," said Abu Rudeineh.
However, he said, there were still "contacts at the security level to fight terrorism."
The status of Jerusalem is one of the thorniest disputes between Israel and the Palestinians.
Israel regards the entire city, including the eastern sector it captured in the 1967 Six Day War and annexed, as its "eternal and indivisible capital," but that is not recognized internationally.The Trump administration has said that the city's final borders should be decided by the parties.