The European Union said today it would provide an extra €85 million to the Palestinian Authority to help pay salaries of essential workers and to support vulnerable families.

The move was decided on after Israel on Sunday blocked the transfer of $105 million in customs duties and other levies it collects on behalf of the Palestinian Authority, following a deal to reunite the two rival wings of the Palestinian independence movement.

A European Commission statement said the EU funds were being advanced under an accelerated procedure at the request of Palestinian prime minister Salam Fayyad to meet urgent financial needs.

The statement said €45 million would go towards salaries and pensions of vital workers, mainly doctors, nurses and teachers. A further €40 million would go to social allowances to vulnerable Palestinian families.

"It is important that access to essential public services remains uninterrupted and the right to social services is respected," EU foreign policy chief Catherine Ashton said.

The EU funds are in addition to €100 million already approved for 2011.

The money will be channelled through an EU mechanism which has provided €762 million

in support to the Palestinian Authority since 2008, in addition to €276 from EU states.

Palestinians see reconciliation between the secular Fatah and Islamist Hamas as crucial for their drive for an independent state in territories Israel captured in the 1967 Arab-Israeli War. Israel has condemned the unity pact as a "tremendous blow to peace".

Meanwhile masked gunmen shot and killed a Palestinian man they thought was an Israeli collaborator in the occupied West Bank tonight, medical and security sources said.

Mohammad Khawaldi (30) was shot in Jalazoun refugee camp near the city of Ramallah, his body riddled with bullets, a medic who transferred the corpse to a hospital told Reuters.

A Palestinian security source claimed Mr Khawaldi worked for Israeli intelligence and was a "wanted man". Palestinian security did not know the identity of the killers and has begun an investigation, the source said.

Reuters