GAZA (Reuters) - Hamas said Monday the West’s boycott of the Islamist group would undercut international reconstruction efforts in the Gaza Strip, a cautionary message coinciding with an international donors’ conference in Egypt.

Western powers say they will not deal with Hamas, which is considered a terrorist organisation by the United States and the European Union, unless the group renounced violence and recognized Israel.

“To bypass the legitimate Palestinian authorities in the Gaza Strip is a move in the wrong direction and it deliberately undermines the reconstruction,” Hamas spokesman Fawzi Barhoum said in the Hamas-controlled Gaza Strip.

International donors were set to pledge at least $3 billion (2 billion pounds) in aid to the Palestinian Authority of Hamas rival President Mahmoud Abbas.

Much of the funds will be used to rebuild the Gaza Strip after a devastating Israeli offensive in January, and the United States, a major donor, is adamant none of the money will go to Hamas.

The cash pledges could bolster Abbas, whose secular Fatah faction was driven out of the Gaza Strip by Hamas in fighting in 2007.

Before the start of the donors’ conference, Abbas’s West Bank-based government made a public call this week to thousands of Palestinians in the Gaza Strip whose houses were damaged or destroyed in the 22-day Israeli campaign.

Kamal Hassouni, a minister in the Palestinian Authority, told Reuters that a committee would assess the amount of damage to each house and then banks would reimburse the owners directly. The whole process will take about five weeks, he said.

Hassouni said $348 million of the foreign aid would be used for housing, $119 million for transport services, $266 million for farming and $146 million for industry. About $1.45 billion will support the Palestinian Authority 2009 budget and the rest will fund other government expenses.

Hamas, Fatah and other Palestinian factions have been holding Egyptian-brokered reconciliation talks. Abbas has said that any unity government would have to accept a two-state solution with Israel, a demand rejected by Hamas.

Speaking at the donors’ conference, Abbas called for holding a presidential and parliament election in the Gaza Strip and West Bank in January 2010. Hamas says that according to Palestinian law, Abbas’s term as president ended two months ago.

(Reporting by Nidal al-Mughrabi in Gaza and Mohammed Assadi in Ramallah)