The US House of Representatives has voted to cut direct US aid to the Palestinian Authority unless Hamas renounces its call to destroy Israel.
Hamas has long been calling for Israel to be destroyed
The Hamas militant group was swept to power in Palestinian polls last month.
House majority leader, the Republican John Boehner, said the vote would send a clear message that the US "will not support terrorist organisations".
President George W Bush is not bound by the vote but his government has already threatened cuts in Palestinian aid.
Secretary of State Condoleezza Rice told the Senate Foreign Relations Committee on Wednesday that "no money will go" to a Hamas government.
But, she said, the US will continue to provide humanitarian aid to the Palestinians, the AFP news agency reports.
The US has budgeted $150 million in aid to the Palestinians for 2006, according to the Reuters news agency.
The EU and US - both major donors of aid to the Palestinian Authority - have been urging Hamas to renounce violence since its shock election victory in January.
Israel has also said it is likely to stop paying tax revenues due to the Palestinian Authority.
Hamas has rejected the donors' demands as unfair, warning that they could endanger the well-being of Palestinians.
Addressing the House of Representatives on Wednesday, Mr Boehner said the US was encouraged by the Palestinians' free and fair elections and would continue to support democratic ventures in the region.
"At the same time," he said, "the new government must be aware of both its domestic responsibilities and international obligations."
"Until Hamas changes course - dismantles its terrorist organization, and agrees to work towards a peaceful settlement with Israel - no taxpayer money should be provided to support the Palestinian government."
The vote in favour of cutting aid to the Palestinian Authority was almost unanimous.
1: World Bank $85m
2: Isr/Pal integration $12m
3: UN relief (UNRWA) $77m
4: Food aid $35m
5: Humanitarian aid $33m
6: Special projects $24m
7: Infrastructure $72m
8: Member states $262m
EU TOTAL: $600m
1: 2003/04 rollover $175m
2: PA debts $20m
3: Gaza infrastructure $50m
4: USAID projects $155m
US TOTAL: $400m