The "Quartet" of Middle East peace brokers have agreed on a plan to resume aid for Palestinians, frozen since the Hamas government took power.

The scheme aims to release more than 120m dollar of EU funds to support local health services and cater for the basic needs of poor Palestinians.

But funds will bypass the government, which refuses to recognize Israel.

Many Palestinians have been suffering severe economic hardship following the suspension of international aid.

The EU and US cut off funding after Hamas came to power earlier this year, accusing it of being a terrorist group.

But the aid freeze has prompted fears of a humanitarian crisis.

The US, EU, UN and Russia said in a statement that they endorsed an EU proposal to provide support for local health services, guarantee fuel supplies and provide for the basic needs of poor Palestinians.

But they stressed that the plan was limited in scope and duration, and they would decide whether it was still needed in three months' time.

The Quartet said it hoped that Israel and other international donors would consider participating in the scheme.

'Affront to democracy'

The Hamas-led Palestinian Authority (PA) has faced a financial crunch since Western donors cut off funding.

The EU has been the biggest aid donor to the Palestinians, giving some 500m euros a year.

Under the new plan, the EU is considering an initial 100m euros and wants to have the funding mechanism operating by early July.

But EU leaders have insisted there will be no contact with Hamas unless it renounces violence, recognizes Israel and respects existing peace agreements.

Palestinian President Mahmoud Abbas earlier described the move as a step forward, but said "the measure cancels the role of the government and cancels the role of the Palestinian Authority".

Before the deal was agreed, a Hamas spokesman dismissed the aid scheme as "an affront to democracy" - which would widen the gap between the people and their government.

The BBC's Owen Clegg says that by agreeing the plan, the Quartet finds itself undermining a democratically elected government by establishing what is, in effect, a parallel administration.

The fund for paying the Palestinians will be managed by the World Bank and the EU, working with the office of Mr Abbas, whose Fatah movement is the main political rival of Hamas.

Muslim pledges

The Quartet announced the aid fund plan last month, amid a mounting humanitarian crisis in the West Bank and Gaza.

Palestinian hospitals have been struggling to maintain services and families have been selling off their valuables to buy food.

Earlier this month, some Palestinian government workers received some of their salary for the first time in three months.

Several Muslim states have pledged money to the PA.

Photo Caption

Palestinian boy with the words "I am hungry" in a protest against the cutting of aid