The United States on Monday lifted its economic and political embargo against the Palestinian government, Secretary of State Condoleezza Rice announced shortly after the European Union foreign ministers announced the lifting of a similar embargo.

The embargo was imposed when militant group Hamas came to power in the Palestinian Authority in March 2006. The lifting of the ban follows the expulsion of Hamas members from a new emergency government put together by Palestinian Authority Chairman Mahmoud Abbas.

The move is meant to strengthen Western-backed Abbas by resuming direct U.S. and EU aid to the Palestinian Authority, which has been economically crippled since foreign aid had been cut off.

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Rice said Monday that she had informed the new Palestinian Prime Minister Salam Fayyad of the decision in phone call earlier Monday.

"I told him the United States would resume full assistance to the Palestinian government and normal government to government contacts," she told reporters at the State Department. "I told the prime minister that we want to work with his government and support his efforts to enforce the rule of law and to ensure a better life for the Palestinian people."

"We intend to lift our financial restrictions on the Palestinian government, which has accepted previous agreements with Israel and rejects the path of violence. This will enable the American people and American financial institutions to resume normal economic and commercial ties with the Palestinian government," Rice said.

She said the administration would work with Congress to reprogram assistance to the Palestinian Authority and would also contribute an additional $40 million to the United Nations to help Palestinians, particularly in the Gaza Strip, which is now controlled by Hamas.

"Through its actions, Hamas sought to divide the Palestinian nation, we reject that," Rice said. "It is the position of the United States that there is one Palestinian people and there should be one Palestinian state."

The European Union foreign ministers also announced the lifting of a 15-month-old aid ban Monday after a round of talks in Luxembourg. The ministers issued a statement saying "the union will resume normal ties with the Palestinian Authority immediately and will develop conditions for the transfer of emergency aid."

Earlier Monday, Foreign Minister Tzipi Livni said that Israel will resume payments of previously withheld Palestinian tax revenues if Abbas's emergency cabinet commits to peace and supports Israel's right to exist.

"We are willing to work with those who support the goal of the two-state solution of Israel and the Palestinians living side by side in peace," Livni said as she arrived at a meeting with European Union foreign ministers.

"With this kind of government," she added, "Israel will work and, of course, release hundreds of millions in tax revenue Israel has held back from the Palestinian government while it included the Islamic Hamas movement."