The European Union said Monday it has begun paying social allowances to 40,000 needy Palestinian families through a temporary funding program overseen by the World Bank that bypasses the Hamas-led Palestinian government.

The funding, at the outset of Ramadan, comes on top of spending for 11,500 health workers who are no longer paid and pensioners, the European Commission said in a statement.

It added the needy families - identified from those who received social welfare from the previous Palestinian government - will receive $346 each.

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Regular welfare payments stopped in February because the current Hamas-led government has scared off direct international aid payments because it does not recognize Israel or is ready to renounce violence.

The temporary international funding scheme that bypasses the Hamas-led
government "is helping to meet the most urgent needs of the Palestinian
people," EU External Relations Commissioner Benita Ferrero-Waldner said in a statement.

She said the Quartet members of the United States, the EU, Russia and the
United Nations - the promoters of the stalled Mideast peace process - agreed last week to expand the scope of the program.

She invited "new donors to come forward" and on Israel to resume transfers of about $50 million a month to the Palestinians of tax and
customs duties it levies on imports headed for the Palestinian erritories.

The special funding program was established in June and directs funding to three key areas: support for health services, utilities and social allowances.

The EU said more than 600,000 people will benefit from social allowances, mostly health care and other public service providers, pensioners and the 40,000 needy families. The funding program has already delivered over 2 million liters (500,000 gallons) of fuel to supply power for hospitals and water in the Gaza Strip following.