Ashrawi's condemnation came after the US Trump administration informed staff members at the PLO General Delegation Office in Washington, DC of the guidelines for closing down the office last week.
Staff members were ordered to cease all operations, close down all bank accounts and were informed that the lease would not be renewed.
The staff was also told to vacate the premises by October 13th.
The US administration also revoked the visas of Palestinian Ambassador Husam Zomlot's wife along with his two children, although their visas are valid until 2020.
Last week, Zomlot's two children, Said,7, and Alma, 5, were pulled out of their school in Washington, DC and have since left the country.
Hanan Ashrawi condemned these recent events in a statement, saying that "as if the announcement that the US would close our office in Washington, DC was not enough, this vindictive action by the Trump administration is spiteful."
"The US has taken its attempts to pressure and blackmail the Palestinians to a new level."
She stressed that "by deliberately targeting the family of Ambassador Zomlot, the US administration has gone from cruel punishment to revenge against the Palestinians and their leadership even to the point of causing hardship to their innocent children and families."
She added that "this unconscionable move goes against all diplomatic protocol and constitutes an inhumane escalation on the part of the Trump administration to persist in their policy of pressure and extortion," Maan news agency reported.
Ashrawi concluded "Instead of working for a genuine peace, the US administration is destroying the chances of peace and undermining its own credibility and standing on all levels."