EU External Relations Commissioner Benita Ferrero-Waldner said that Europe continued to "stand by the Palestinian people" and would provide money for electricity, food, education and other aspects, so their basic human needs would be met.

She said if the new Palestinian leadership wanted to see all aid resumed, Hamas must meet three conditions -- renouncing violence, recognizing Israel's right to exist, and honoring previous Palestinian-Israeli peace deals.

EU foreign ministers met in Luxembourg on Monday and expected to give firm backing to a freeze on aid to the Hamas-led Palestinian government.

British Foreign Secretary Jack Straw, said the EU had "responsibilities not to see the Palestinian people suffer," but "so does the Hamas government."

"We do not wish to punish the Palestinian people for the decision they freely made to elect a Hamas-dominated government," said Straw.

"At the same time, Hamas has got to recognize that being elected as a government, democratically, they have responsibilities as democrats to do what everybody else has to do as a democrat, which is to eschew violence."

EU foreign policy chief Javier Solana played down the effect on the Palestinian National Authority's finances, and dismissed talk of an imminent collapse.

"There is still money for that not to happen, and in any case we will support the people as much as we can," he said.

The European Commission, the EU's executive body, announced Friday the suspension of its direct aid to the PNA, trying to press Hamas to give up its anti-Israeli ideology.

The move was followed within hours by a similar announcement by the U.S. State Department. Norway followed suit on Sunday.

The EU has been the biggest donor of Palestinian aid, providing an average 500 million euros (600 million U.S. dollars) a year.

Diplomats said the cut-off covered all direct aid to the Palestinian government, and payment of public employee salaries with EU funds through the World Bank, but not humanitarian aid through international and non-governmental organizations.

The freeze has compounded an already dire financial situation for the Palestinian government.

Palestinian Finance Minister Omar Abdel Razeq, also a senior Hamas leader, said earlier that the Palestinian treasury was empty,casting doubt on whether the PNA would be able to garner 120 million dollars to pay government employees.

He said that the Palestinian government was appealing to Arab and foreign countries for urgent financial aid to enable the government to foot the bill.

The International Committee of the Red Cross (ICRC) noted on Monday that the United States and the EU could not expect humanitarian organizations to fill in for the Palestinian government if it was unable to maintain services because of a lack of funds.

"Humanitarian organizations simply can not replace the range of services that a public administration has to deal with. It's neither our role, nor do we have the range of capacities," said Pierre Kraehenbuehl, director of operations for the ICRC.

In addition, he said, Israel as the occupying power was responsible under international law to ensure that the basic needs of civilians in the Palestinian territories, including food and medical supplies, were met.

He warned of a possible humanitarian and security crisis if the newly elected government was unable to provide basic services and ensure law and order.

In Gaza, hundreds of Palestinians, mostly teenagers, took to the streets on Monday to protest the EU decision to cut aid to the PNA.

The demonstrators held banners which read "No one will be able to make us starve," "the EU decision aims at blackmailing us" and,"We will never make concessions to our legitimate rights."

They also waved Hamas green flags and chanted slogans against Israel and the United States.

Meanwhile, dozens of Palestinian government employees sent a petition to the EU, urging the pan-European bloc not to cut financial aid to the Palestinians. The Hamas-led cabinet has not paid the March salaries to government employees, citing severe financial shortages.

Hamas, which has been bent on the destruction of Israel, won a landslide victory in the Palestinian parliamentary election in January. The movement has single-handedly formed a new Palestinian cabinet after other factions, including the long dominant Fatah movement, refused to join a coalition government.