The US Congress has approved a bill which continues a ban on US aid to the Hamas-led Palestinian Authority as long as it refuses to recognise Israel and renounce violence.
The US House of Representatives passed the bill, already approved by the Senate, on a vote last night.
The legislation, which now goes to US President George W Bush for his signature, allows the continuation of humanitarian assistance and other aid which permits moderate Palestinian President Mahmoud Abbas to continue his work.
The bill is slightly different from a version which was rejected by the Bush administration in May. The new text allows the administration to bypass the interdiction in the name of US national security.
However, UN aid groups are appealing for $450 million in aid next year to combat the problems in the Palestinian territories.
International aid to the Palestinians was suspended following Hamas's election victory, plunging the region into a humanitarian crisis.
Aid groups have highlighted how international sanctions on the Hamas-led government and Israeli restrictions on Gaza exports have devastated the Palestinian economy.
UN humanitarian co-ordinator in the Palestinian territories, Kevin Kennedy, said the UN appeal was particularly aimed at assisting the most vulnerable Palestinians, including children, who make up about half the population.
Livni in Washington for talks
The Israeli foreign minister, Tzipi Livni, has arrived in the US amid Israeli worries that the recent Iraq Study Group report could cause the Jewish state's main ally to change its stance on the Middle East crisis.
Ms Livni will meet with US Secretary of State Condoleezza Rice and other officials during her visit.
The ISG report said progress in the Palestinian-Israeli peace process was key to the situation in Iraq and called for direct US talks with two of the most vocal opponents of Israel, Syria and Iran.
Following the report, Mr Bush promised 'concerted efforts to advance the cause of peace' and said British Prime Minister Tony Blair would soon travel to the region for talks.
However, Israeli Prime Minister Ehud Olmert has expressed dissatisfaction with the report's recommendations, saying US problems in Iraq were 'entirely independent' of what he described as the 'controversy' between Israel and the Palestinians.
