The border checkpoint near the West Bank town of Jericho is the only point of access to Jordan for Arab residents and businesses in the West Bank.
A statement issued by the Prime Minister office noted that a cabinet committee charged with improving the West Bank economy headed by Prime Minister Benjamin Netanyahu, ordered the extension of hours of operation of Allenby for the transport of goods.
A spokesman for the Prime Minister said: "Until now the crossing was open until eight in the evening, it will now be open until midnight, with the option to extend operations to 24 hours according to need."
Netanyahu also vowed to push ahead with development of three internationally-backed West Bank projects that have been stalled for years, instructing relevant government bodies to remove the bureaucratic obstacles.
The projects include a French-backed light-industrial park in Bethlehem, a German-assisted industrial park near Jenin and a Japanese-funded scheme to export farming products from the Jericho region.
Also on Wednesday, Deputy Foreign Minister Danny Ayalon and other Israeli officials presented steps the government has implemented over the past three months in a bid to ease the daily life of West Bank Palestinians. The measures included the removal of dozens of checkpoints in the occupied territory.