The American Secretary of State, Madeleine Albright, says the Palestinian donor conference in Washington has secured pledges of more than three-billion dollars in economic aid -- almost half of it from the United States itself and the European Union.

Mrs Albright said the pledges sent out a message of hope.

Announcing the United States' own donation, President Clinton said he wanted to send a signal that peace in the Middle East was a sound investment, but would only last if it gave real benefits to those involved.

Earlier, the Palestinian leader, Yasser Arafat, had accused Israel of undermining the Palestinian economy with closures of Gaza and the West Bank.

The BBC Middle East analyst says donors have pumped two-billion dollars into Gaza and the West Bank in the last five years of the peace process, but Palestinian living conditions have declined by a third.