George Bush, the US president, has signed into law a bill that will block US aid to the Hamas-led Palestinian government and ban contact with Hamas until the party has renounced violence and recognised Israel's existence.
It will also create a million fund to promote democracy and human rights in Israel and the Palestinian territories.
The Bush administration stopped aid shortly after the January election victory by Hamas, which Washington considers an international terrorist organisation.
The legislation has no effect on aid for the Palestinian Authority.
Mitch McConnell, a US republican senator, said the legislation makes it clear the Palestinian Authority can expect no US help so long as it continues to be led by Hamas.
"The Palestinian people are ill-served by a Hamas-led government that refuses to work toward the betterment of its citizens by failing to renounce terror and work toward peace with Israel," McConnell said.
The White House said the legislation Bush signed reflects the administration's concern over the current government's failure to renounce violence and terror, recognise Israel and respect previous agreements and obligations.
Exceptions are made to provide financial support for Mahmoud Abbas, the Palestinian president, who has committed to a negotiated two-state solution with Israel.
Despite the ban on official aid, the United States has provided 8 million in humanitarian aid, delivered by NGOs and in other ways that bypass the Hamas government.
Source: Jazeera
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