The Hamas-led Palestinian government has given a guarded welcome to an international plan to provide indirect humanitarian aid to Palestinian areas.
The donors say they want to avert a humanitarian crisis
Speaking after the "Quartet" of Middle East peace brokers agreed the aid, a Hamas spokesman said any funds for impoverished Palestinians were welcome.
But he argued that in bypassing the elected government, the Quartet was undermining democracy.
The European Union proposed the agreement and hailed its acceptance.
"Europeans are determined to play our part in preventing a humanitarian crisis in the Palestinian territories," said EU External Relations Commissioner Benita Ferrero-Waldner in Brussels.
The EU gives about 500m euros ($632m) a year to the Palestinians, making it by far the biggest aid donor.
Cash in hand
The Quartet, made up of the United States, the EU, the UN and Russia, announced that they would back an EU proposal to provide support for local health services, guarantee fuel supplies and provide for the basic needs of poor Palestinians.
In all, about $120m of largely European money is being released.
The Palestinian authority is heavily dependent on foreign aid and on donor countries. Thousands of Palestinians who draw government salaries have not been paid for several months since the financial boycott began.
Public employees will not directly benefit from the new aid plan and the Hamas government says it will continue carrying millions of dollars of donations in cash across the border from Egypt.
Hamas's policy, the BBC's Wyre Davies says, is a controversial and unconventional practice.
Hundreds of millions of dollars have been given or promised by Iran, Pakistan and many other countries.
While welcoming the Quartet's aid agreement, Aziz Dweik, speaker of the Palestinian parliament and a Hamas leader, said it was "not the way to do it".
"The Quartet is really supposed to deal with the Palestinian government because it is an elected government," the Hamas official said.
In another move on Sunday, the United Nations agency that provides relief for the Palestinians, UNRWA, began distributing emergency food aid to an additional 90,000 Palestinian refugees in the Gaza Strip.
The agency says the new recipients are mainly government employees who have not been paid since March.
UNRWA now provides food aid for 725,000 Palestinian refugees in the Gaza Strip alone.
Under the scheme aims to release more than $120m of EU funds to support local health services and cater for the basic needs of poor Palestinians.
In another development, Palestinian Authority President Mahmoud Abbas met Jordan's King Abdullah II on Sunday in a bid to rally opposition to Israel's plans to redraw its borders.